NGEx Minerals Insiders Sell CA$5.4m Of Stock, Possibly Signalling Caution

Over the past year, many NGEx Minerals Ltd. (TSE:NGEX) insiders sold a significant stake in the company which may have piqued investors' interest. When analyzing insider transactions, it is usually more valuable to know whether insiders are buying versus knowing if they are selling, as the latter sends an ambiguous message. However, shareholders should take a deeper look if several insiders are selling stock over a specific time period.

Although we don't think shareholders should simply follow insider transactions, we would consider it foolish to ignore insider transactions altogether.

See our latest analysis for NGEx Minerals

The Last 12 Months Of Insider Transactions At NGEx Minerals

Over the last year, we can see that the biggest insider purchase was by Independent Director Adam Lundin for CA$2.9m worth of shares, at about CA$6.50 per share. Although we like to see insider buying, we note that this large purchase was at significantly below the recent price of CA$9.06. Because the shares were purchased at a lower price, this particular buy doesn't tell us much about how insiders feel about the current share price.

Happily, we note that in the last year insiders paid CA$5.2m for 695.00k shares. On the other hand they divested 635.45k shares, for CA$5.4m. All up, insiders sold more shares in NGEx Minerals than they bought, over the last year. The sellers received a price of around CA$8.50, on average. We don't gain confidence from insider selling below the recent share price. Since insiders sell for many reasons, we wouldn't put too much weight on it. The chart below shows insider transactions (by companies and individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!

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Insiders At NGEx Minerals Have Bought Stock Recently

At NGEx Minerals,over the last quarter, we have observed quite a lot more insider buying than insider selling. In total, two insiders bought CA$2.1m worth of shares in that time. But President Wojtek Wodzicki sold shares worth CA$1.6m. We think insiders may be optimistic about the future, since insiders have been net buyers of shares.

Insider Ownership Of NGEx Minerals

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. Insiders own 2.5% of NGEx Minerals shares, worth about CA$43m. While this is a strong but not outstanding level of insider ownership, it's enough to indicate some alignment between management and smaller shareholders.

So What Do The NGEx Minerals Insider Transactions Indicate?

It is good to see recent purchasing. On the other hand the transaction history, over the last year, isn't so positive. While recent transactions indicate confidence in NGEx Minerals, insiders don't own enough of the company to overcome our cautiousness about the longer term transactions. Overall they seem reasonably aligned. So while it's helpful to know what insiders are doing in terms of buying or selling, it's also helpful to know the risks that a particular company is facing. To that end, you should learn about the 4 warning signs we've spotted with NGEx Minerals (including 2 which don't sit too well with us).

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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 of direct interests only, but not derivative transactions or indirect interests.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.