Insiders Sold US$1.6m Of 4Front Ventures Stock Possibly Sending Warning Sign

Despite a 27% gain in 4Front Ventures Corp.'s (CSE:FFNT) stock price this week, shareholders shouldn't let up. Although prices were relatively low, insiders chose to sell US$1.6m worth of stock in the past 12 months. This could be a sign of impending weakness.

Although we don't think shareholders should simply follow insider transactions, we do think it is perfectly logical to keep tabs on what insiders are doing.

View our latest analysis for 4Front Ventures

The Last 12 Months Of Insider Transactions At 4Front Ventures

In the last twelve months, the biggest single sale by an insider was when the insider, Joshua Rosen, sold CA$199k worth of shares at a price of CA$0.67 per share. While insider selling is a negative, to us, it is more negative if the shares are sold at a lower price. The silver lining is that this sell-down took place above the latest price (CA$0.28). So it is hard to draw any strong conclusion from it.

All up, insiders sold more shares in 4Front Ventures than they bought, over the last year. The chart below shows insider transactions (by companies and individuals) over the last year. 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 winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

4Front Ventures Insiders Are Selling The Stock

We've seen more insider selling than insider buying at 4Front Ventures recently. In total, insiders sold CA$425k worth of shares in that time. On the other hand we note CEO & Non Independent Director Leonid Gontmakher bought CA$57k worth of shares , as previously mentioned . Since the selling really does outweigh the buying, we'd say that these transactions may suggest that some insiders feel the company has been fully valued in recent months.

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. I reckon it's a good sign if insiders own a significant number of shares in the company. Insiders own 22% of 4Front Ventures shares, worth about CA$40m. While this is a strong but not outstanding level of insider ownership, it's enough to indicate some alignment between management and smaller shareholders.

So What Do The 4Front Ventures Insider Transactions Indicate?

Unfortunately, there has been more insider selling of 4Front Ventures stock, than buying, in the last three months. Zooming out, the longer term picture doesn't give us much comfort. Insiders own shares, but we're still pretty cautious, given the history of sales. So we'd only buy after careful consideration. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. Our analysis shows 3 warning signs for 4Front Ventures (1 is significant!) and we strongly recommend you look at these before investing.

But note: 4Front Ventures 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.