Should You Be Worried About Insider Transactions At AgraFlora Organics International Inc. (CNSX:AGRA)?

It is not uncommon to see companies perform well in the years after insiders buy shares. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So we’ll take a look at whether insiders have been buying or selling shares in AgraFlora Organics International Inc. (CNSX:AGRA).

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, such insiders must disclose their trading activities, and not trade on inside information.

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 Columbia 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’.

Check out our latest analysis for AgraFlora Organics International

AgraFlora Organics International Insider Transactions Over The Last Year

Over the last year, we can see that the biggest insider purchase was by Independent Director Christopher Hornung for CA$249k worth of shares, at about CA$0.17 per share. Although we like to see insider buying, we note that this large purchase was at significantly below the recent price of CA$0.30. While it does suggest insiders consider the stock undervalued at lower prices, this transaction doesn’t tell us much about what they think of current prices.

All up, insiders sold more shares in AgraFlora Organics International than they bought, over the last year. You can see a visual depiction of insider transactions (by 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!

CNSX:AGRA Recent Insider Trading, August 8th 2019
CNSX:AGRA Recent Insider Trading, August 8th 2019

Does AgraFlora Organics International Boast High 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. A high insider ownership often makes company leadership more mindful of shareholder interests. Based on our data, AgraFlora Organics International insiders have about 1.1% of the stock, worth approximately CA$2.8m. But they may have an indirect interest through a corporate structure that we haven’t picked up on. We prefer to see high levels of insider ownership.

What Might The Insider Transactions At AgraFlora Organics International Tell Us?

It doesn’t really mean much that no insider has traded AgraFlora Organics International shares in the last quarter. Our analysis of AgraFlora Organics International insider transactions leaves us unenthusiastic. And usually insiders own more stock in the company, according to our data. To put this in context, take a look at how a company has performed in the past. You can access this detailed graph of past earnings, revenue and cash flow .

But note: AgraFlora Organics International 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.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Thank you for reading.