Should You Take Comfort From Insider Transactions At ASA Gold and Precious Metals Limited (NYSE:ASA)?

We've lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. The flip side of that is that there are more than a few examples of insiders dumping stock prior to a period of weak performance. So shareholders might well want to know whether insiders have been buying or selling shares in ASA Gold and Precious Metals Limited (NYSE:ASA).

What Is Insider Selling?

It's quite normal to see company insiders, such as board members, trading in company stock, from time to time. 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 equally, we would consider it foolish to ignore insider transactions altogether. For example, a Harvard University study found that 'insider purchases earn abnormal returns of more than 6% per year'.

Check out our latest analysis for ASA Gold and Precious Metals

The Last 12 Months Of Insider Transactions At ASA Gold and Precious Metals

Over the last year, we can see that the biggest insider sale was by the Principal Executive Officer & COO, Alexander Merk, for US$184k worth of shares, at about US$13.55 per share. That means that an insider was selling shares at slightly below the current price (US$21.62). We generally consider it a negative if insiders have been selling, especially if they did so below the current price, because it implies that they considered a lower price to be reasonable. However, while insider selling is sometimes discouraging, it's only a weak signal. It is worth noting that this sale was only 30% of Alexander Merk's holding. Alexander Merk was the only individual insider to sell over the last year. Notably Alexander Merk was also the biggest buyer, having purchased US$221k worth of shares.

In the last twelve months insiders purchased 17.45k shares for US$221k. On the other hand they divested 13.60k shares, for US$184k. In the last twelve months there was more buying than selling by ASA Gold and Precious Metals insiders. Their average price was about US$12.66. To my mind it is good that insiders have invested their own money in the company. However, you should keep in mind that they bought when the share price was meaningfully below today's levels. 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!

There are always plenty of stocks that insiders are buying. So if that suits your style you could check each stock one by one or you could take a look at this free list of companies. (Hint: insiders have been buying them).

Insiders at ASA Gold and Precious Metals Have Bought Stock Recently

There was some insider buying at ASA Gold and Precious Metals over the last quarter. Independent Non Executive Chairman Mary Hoene shelled out US$16k for shares in that time. It's great to see that insiders are only buying, not selling. But the amount invested in the last three months isn't enough for us too put much weight on it, as a single factor.

Does ASA Gold and Precious Metals 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. I reckon it's a good sign if insiders own a significant number of shares in the company. Our data suggests ASA Gold and Precious Metals insiders own 0.3% of the company, worth about US$1.2m. We prefer to see high levels of insider ownership.

What Might The Insider Transactions At ASA Gold and Precious Metals Tell Us?

We note a that there has been a bit of insider buying recently (but no selling). That said, the purchases were not large. On a brighter note, the transactions over the last year are encouraging. The transactions are fine but it'd be more encouraging if ASA Gold and Precious Metals insiders bought more shares in the company. 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. Case in point: We've spotted 2 warning signs for ASA Gold and Precious Metals you should be aware of.

But note: ASA Gold and Precious Metals 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.

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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. 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.
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