We often see insiders buying up shares in companies that perform well over the long term. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So before you buy or sell MacDonald Mines Exploration Ltd. (CVE:BMK), you may well want to know whether insiders have been buying or selling.
What Is Insider Buying?
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, most countries require that the company discloses such transactions to the market.
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 Harvard University study found that 'insider purchases earn abnormal returns of more than 6% per year.
The Last 12 Months Of Insider Transactions At MacDonald Mines Exploration
Over the last year, we can see that the biggest insider purchase was by insider Eric Sprott for CA$1.5m worth of shares, at about CA$0.08 per share. That means that an insider was happy to buy shares at above the current price of CA$0.07. It's very possible they regret the purchase, but it's more likely they are bullish about the company. We always take careful note of the price insiders pay when purchasing shares. As a general rule, we feel more positive about a stock if insiders have bought shares at above current prices, because that suggests they viewed the stock as good value, even at a higher price.
In the last twelve months MacDonald Mines Exploration insiders were buying shares, but not selling. You can see the insider transactions (by individuals) over the last year depicted in the chart below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
MacDonald Mines Exploration is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Are MacDonald Mines Exploration Insiders Buying Or Selling?
Chief Financial Officer Fiona Fitzmaurice bought just CA$1.1k worth of shares in that time. That's not much at all. Overall, we don't think these recent trades are particularly informative, one way or the other.
Insider Ownership of MacDonald Mines Exploration
For a common shareholder, it is worth checking how many shares are held by company insiders. I reckon it's a good sign if insiders own a significant number of shares in the company. It appears that MacDonald Mines Exploration insiders own 16% of the company, worth about CA$1.7m. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.
So What Do The MacDonald Mines Exploration Insider Transactions Indicate?
We note a that there has been a bit of insider buying recently (but no selling). That said, the purchases were not large. On a brighter note, the transactions over the last year are encouraging. Insiders own shares in MacDonald Mines Exploration and we see no evidence to suggest they are worried about the future. 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 7 warning signs we've spotted with MacDonald Mines Exploration (including 5 which are a bit unpleasant).
But note: MacDonald Mines Exploration may not be the best stock to buy. So take a peek at this free list of interesting companies with high ROE and low debt.
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 firstname.lastname@example.org. 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.
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