Insiders Made Right Decision To Sell As Quartz Mountain Resources Dips 13%

Insiders seem to have made the most of their holdings by selling CA$1.8m worth of Quartz Mountain Resources Ltd. (CVE:QZM) stock at an average sell price of CA$0.20 during the past year. The company’s market cap plunged by CA$4.1m after price dropped by 13% last week but insiders were able to limit their loss to an extent.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, logic dictates you should pay some attention to whether insiders are buying or selling shares.

See our latest analysis for Quartz Mountain Resources

Quartz Mountain Resources Insider Transactions Over The Last Year

Over the last year, we can see that the biggest insider sale was by the Chairman, Robert Dickinson, for CA$1.8m worth of shares, at about CA$0.20 per share. That means that an insider was selling shares at slightly below the current price (CA$0.45). When an insider sells below the current price, it suggests that they considered that lower price to be fair. That makes us wonder what they think of the (higher) recent valuation. Please do note, however, that sellers may have a variety of reasons for selling, so we don't know for sure what they think of the stock price. This single sale was just 31% of Robert Dickinson's stake. The only individual insider seller over the last year was Robert Dickinson. Notably Robert Dickinson was also the biggest buyer, having purchased CA$1.4m worth of shares.

The chart below shows insider transactions (by companies and individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

If you are like me, then you will not want to miss this free list of small cap stocks that are not only being bought by insiders but also have attractive valuations.

Insider Ownership

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. Quartz Mountain Resources insiders own about CA$13m worth of shares (which is 46% of the company). I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.

What Might The Insider Transactions At Quartz Mountain Resources Tell Us?

It doesn't really mean much that no insider has traded Quartz Mountain Resources shares in the last quarter. It's heartening that insiders own plenty of stock, but we'd like to see more insider buying, since the last year of Quartz Mountain Resources insider transactions don't fill us with confidence. While it's good to be aware of what's going on with the insider's ownership and transactions, we make sure to also consider what risks are facing a stock before making any investment decision. Be aware that Quartz Mountain Resources is showing 4 warning signs in our investment analysis, and 2 of those don't sit too well with us...

If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, that have HIGH return on equity 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.