Stock Analysis

Insiders who sold Canopy Growth Corporation (TSE:WEED) earlier this year probably made the right call as market cap dropped by CA$151m

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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!

TSX:WEED Insider Trading Volume February 8th 2023

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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.

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. 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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