Insiders Of Founders Metals Retain CA$4.1m Of Investment Selling At Higher Prices

While Founders Metals Inc. (CVE:FDR) shareholders have had a good week with the stock up 13%, they shouldn't let their guards down. Although prices were relatively low, insiders chose to sell CA$4.1m worth of stock in the past 12 months. This could be a sign of impending weakness.

While insider transactions are not the most important thing when it comes to long-term investing, we do think it is perfectly logical to keep tabs on what insiders are doing.

Check out our latest analysis for Founders Metals

Founders Metals Insider Transactions Over The Last Year

Over the last year, we can see that the biggest insider sale was by the CEO, President, Colin Padget, for CA$1.1m worth of shares, at about CA$2.90 per share. So it's clear an insider wanted to take some cash off the table, even below the current price of CA$5.74. We generally consider it a negative if insiders have been selling, especially if they did so below the current price, because it implies that they considered a lower price to be reasonable. While insider selling is not a positive sign, we can't be sure if it does mean insiders think the shares are fully valued, so it's only a weak sign. This single sale was just 50% of Colin Padget's stake. Notably Colin Padget was also the biggest buyer, having purchased CA$5.0k worth of shares.

Over the last year we saw more insider selling of Founders Metals shares, than buying. 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!

For those who like to find hidden gems this free list of small cap companies with recent insider purchasing, could be just the ticket.

Does Founders Metals 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. We usually like to see fairly high levels of insider ownership. Founders Metals insiders own about CA$57m worth of shares. That equates to 11% of the company. We've certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.

So What Does This Data Suggest About Founders Metals Insiders?

The fact that there have been no Founders Metals insider transactions recently certainly doesn't bother us. We don't take much encouragement from the transactions by Founders Metals insiders. But we do like the fact that insiders own a fair chunk of the company. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Founders Metals. When we did our research, we found 3 warning signs for Founders Metals (2 make us uncomfortable!) that we believe deserve your full attention.

But note: Founders Metals 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 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.