Insiders who sold Canopy Growth Corporation (TSE:WEED) earlier this year probably made the right call as market cap dropped by CA$151m
By selling CA$187k worth of Canopy Growth Corporation (TSE:WEED) stock at an average sell price of CA$7.21 over the last year, insiders seemed to have made the most of their holdings. The company's market valuation decreased by CA$151m after the stock price dropped 7.6% over the past week, but insiders were spared from painful losses.
Although we don't think shareholders should simply follow insider transactions, logic dictates you should pay some attention to whether insiders are buying or selling shares.
See our latest analysis for Canopy Growth
The Last 12 Months Of Insider Transactions At Canopy Growth
In the last twelve months, the biggest single sale by an insider was when the CEO & Director, David Klein, sold CA$153k worth of shares at a price of CA$9.94 per share. While insider selling is a negative, to us, it is more negative if the shares are sold at a lower price. It's of some comfort that this sale was conducted at a price well above the current share price, which is CA$3.77. So it may not shed much light on insider confidence at current levels.
In the last year Canopy Growth insiders didn't buy any company stock. 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 winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.
Canopy Growth Insiders Are Selling The Stock
We have seen a bit of insider selling at Canopy Growth, over the last three months. Insiders only netted CA$27k selling shares, in that period. Neither the lack of buying nor the presence of selling is heartening. But the selling simply isn't sufficiently substantial to be of much use as a signal.
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. A high insider ownership often makes company leadership more mindful of shareholder interests. Based on our data, Canopy Growth insiders have about 0.09% of the stock, worth approximately CA$1.6m. We prefer to see high levels of insider ownership.
So What Does This Data Suggest About Canopy Growth Insiders?
While there has not been any insider buying in the last three months, there has been selling. But the sales were small, so we're not concerned. Recent sales exacerbate our caution arising from analysis of Canopy Growth insider transactions. And we're not picking up on high enough insider ownership to give us any comfort. So while it's helpful to know what insiders are doing in terms of buying or selling, it's also helpful to know the risks that a particular company is facing. In terms of investment risks, we've identified 2 warning signs with Canopy Growth and understanding these should be part of your investment process.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting 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.
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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.
Canopy Growth Corporation, together with its subsidiaries, engages in the production, distribution, and sale of cannabis and hemp-based products for recreational and medical purposes primarily in Canada, the United States, and Germany.
Excellent balance sheet with limited growth.