We’ve lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. 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 before you buy or sell Canada Cobalt Works Inc. (CVE:CCW), you may well want to know whether insiders have been buying or selling.
What Is Insider Selling?
It’s quite normal to see company insiders, such as board members, trading in company stock, from time to time. However, rules govern insider transactions, and certain disclosures are required.
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 Colombia 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’.
Canada Cobalt Works Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider sale was by Director Jacques Monette for CA$348k worth of shares, at about CA$0.87 per share. That is hardly a positive sign, even though it took place above the latest price (CA$0.47). So it may not shed much light on insider confidence at current levels.
In the last twelve months insiders netted CA$394k for 483.00k shares sold. In total, Canada Cobalt Works insiders sold more than they bought over the last year. The average sell price was around CA$0.82. 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$0.47). You can see the insider transactions over the last year depicted in the chart below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Canada Cobalt Works insiders own about CA$570k worth of shares (which is 1.6% of the company). Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.
What Might The Insider Transactions At Canada Cobalt Works Tell Us?
The fact that there have been no Canada Cobalt Works insider transactions recently certainly doesn’t bother us. The insider transactions at Canada Cobalt Works are not inspiring us to buy. And we’re not picking up on high enough insider ownership to give us any comfort. Along with insider transactions, I recommend checking if Canada Cobalt Works is growing revenue. This free chart of historic revenue and earnings should make that easy.
But note: Canada Cobalt Works 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.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at firstname.lastname@example.org.