Having purchased CA$11m worth of Labrador Gold Corp. (CVE:LAB) stock, the recent 13% pullback is not what insiders may have expected

By
Simply Wall St
Published
May 11, 2022
TSXV:LAB
Source: Shutterstock

Insiders who bought CA$11m worth of Labrador Gold Corp.'s (CVE:LAB) stock at an average buy price of CA$0.93 over the last year may be disappointed by the recent 13% decrease in the stock. Insiders buy with the expectation to see their investments rise in value over a period of time. However, recent losses have rendered their above investment worth CA$6.3m which is not ideal.

While insider transactions are not the most important thing when it comes to long-term investing, logic dictates you should pay some attention to whether insiders are buying or selling shares.

See our latest analysis for Labrador Gold

The Last 12 Months Of Insider Transactions At Labrador Gold

In the last twelve months, the biggest single purchase by an insider was when insider Eric Sprott bought CA$10.0m worth of shares at a price of CA$0.90 per share. So it's clear an insider wanted to buy, even at a higher price than the current share price (being CA$0.54). Their view may have changed since then, but at least it shows they felt optimistic at the time. In our view, the price an insider pays for shares is very important. Generally speaking, it catches our eye when an insider has purchased shares at above current prices, as it suggests they believed the shares were worth buying, even at a higher price. Eric Sprott was the only individual insider to buy during the last year.

Eric Sprott bought 11.61m shares over the last 12 months at an average price of CA$0.93. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

insider-trading-volume
TSXV:LAB Insider Trading Volume May 11th 2022

There are always plenty of stocks that insiders are buying. So if that suits your style you could check each stock one by one or you could take a look at this free list of companies. (Hint: insiders have been buying them).

Insider Ownership

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. From our data, it seems that Labrador Gold insiders own 14% of the company, worth about CA$12m. But they may have an indirect interest through a corporate structure that we haven't picked up on. Whilst better than nothing, we're not overly impressed by these holdings.

So What Does This Data Suggest About Labrador Gold Insiders?

The fact that there have been no Labrador Gold insider transactions recently certainly doesn't bother us. However, our analysis of transactions over the last year is heartening. Insiders own shares in Labrador Gold and we see no evidence to suggest they are worried about the future. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. For instance, we've identified 5 warning signs for Labrador Gold (2 shouldn't be ignored) you should be aware of.

Of course Labrador Gold may not be the best stock to buy. So you may wish to see this free collection of high quality 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.

Discounted cash flow calculation for every stock

Simply Wall St does a detailed discounted cash flow calculation every 6 hours for every stock on the market, so if you want to find the intrinsic value of any company just search here. It’s FREE.

Make Confident Investment Decisions

Simply Wall St's Editorial Team provides unbiased, factual reporting on global stocks using in-depth fundamental analysis.
Find out more about our editorial guidelines and team.