Have Insiders Been Selling NovaGold Resources Inc. (TSE:NG) Shares?

By
Simply Wall St
Published
April 24, 2020

We've lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So shareholders might well want to know whether insiders have been buying or selling shares in NovaGold Resources Inc. (TSE:NG).

Do Insider Transactions Matter?

Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock in the company. However, such insiders must disclose their trading activities, and not trade on inside information.

We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. But equally, we would consider it foolish to ignore insider transactions altogether. As Peter Lynch said, 'insiders might sell their shares for any number of reasons, but they buy them for only one: they think the price will rise.

See our latest analysis for NovaGold Resources

The Last 12 Months Of Insider Transactions At NovaGold Resources

Over the last year, we can see that the biggest insider sale was by the insider, Ronald Rimelman, for CA$416k worth of shares, at about CA$11.38 per share. That means that an insider was selling shares at slightly below the current price (CA$16.89). When an insider sells below the current price, it suggests that they considered that lower price to be fair. That makes us wonder what they think of the (higher) recent valuation. However, while insider selling is sometimes discouraging, it's only a weak signal. It is worth noting that this sale was only 27% of Ronald Rimelman's holding. Ronald Rimelman was the only individual insider to sell shares in the last twelve months.

You can see a visual depiction of insider transactions (by 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!

TSX:NG Recent Insider Trading April 24th 2020

I will like NovaGold Resources better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.

Does NovaGold Resources Boast High Insider Ownership?

I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with insiders. I reckon it's a good sign if insiders own a significant number of shares in the company. NovaGold Resources insiders own about CA$68m worth of shares. That equates to 1.2% of the company. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.

What Might The Insider Transactions At NovaGold Resources Tell Us?

It doesn't really mean much that no insider has traded NovaGold Resources shares in the last quarter. We don't take much encouragement from the transactions by NovaGold Resources insiders. But it's good to see that insiders own shares in the company. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. To assist with this, we've discovered 2 warning signs that you should run your eye over to get a better picture of NovaGold Resources.

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.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.

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