Need To Know: Midas Gold Corp. (TSE:MAX) Insiders Have Been Selling Shares

It is not uncommon to see companies perform well in the years after insiders buy shares. The flip side of that is that there are more than a few examples of insiders dumping stock prior to a period of weak performance. So shareholders might well want to know whether insiders have been buying or selling shares in Midas Gold Corp. ( TSE:MAX ).

Do Insider Transactions Matter?

It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, such insiders must disclose their trading activities, and not trade on inside information.

We don't think shareholders should simply follow insider transactions. But it is perfectly logical to keep tabs on what insiders are doing. For example, a Columbia University study found that 'insiders are more likely to engage in open market purchases of their own company’s stock when the firm is about to reveal new agreements with customers and suppliers'.

Check out our latest analysis for Midas Gold

The Last 12 Months Of Insider Transactions At Midas Gold

The Exploration Manager, Christopher Dail, made the biggest insider sale in the last 12 months. That single transaction was for CA$544k worth of shares at a price of CA$1.55 each. While we don't usually like to see insider selling, it's more concerning if the sales take place at a lower price. The silver lining is that this sell-down took place above the latest price (CA$1.25). So it may not shed much light on insider confidence at current levels.

In the last twelve months insiders purchased 152.09k shares for CA$67k. On the other hand they divested 666.25k shares, for CA$1.0m. Over the last year we saw more insider selling of Midas Gold shares, than buying. The sellers received a price of around US$1.50, on average. It is certainly not great to see that insiders have sold shares in the company. However, we do note that the average sale price was significantly higher than the current share price (which is CA$1.25). You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

If you like to buy stocks that insiders are buying, rather than selling, then you might just love this free list of companies. (Hint: insiders have been buying them).

Does Midas Gold Boast High Insider Ownership?

Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. We usually like to see fairly high levels of insider ownership. From looking at our data, insiders own CA$2.8m worth of Midas Gold stock through direct individual holdings, about 0.5% of the company. We would normally consider this fairly low insider ownership. However, we should add that company insiders including the Chairman of the company have indirect ownership interests through Paulson & Co. Inc. At 44.1% of the Midas Gold register, Paulson & Co. Inc is by far the largest shareholder in the company.

What Might The Insider Transactions At Midas Gold Tell Us?

The fact that there have been no Midas Gold insider transactions recently certainly doesn't bother us. Usually insiders own a fair amount of stock in the company and this appears to be the case here through indirect holdings. While we like knowing what's going on with the insider's ownership and transactions, we make sure to also consider what risks are facing a stock before making any investment decision. Be aware that Midas Gold is showing 3 warning signs in our investment analysis , and 1 of those can't be ignored...

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.

For the purposes of this article, insiders are those individuals who report their transactions to the relevant regulatory body. We currently account for open market transactions and private dispositions, but not derivative transactions.

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This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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