We've lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. On the other hand, we'd be remiss not to mention that insider sales have been known to precede tough periods for a business. So before you buy or sell Shanta Gold Limited (LON:SHG), you may well want to know whether insiders have been buying or selling.
What Is Insider Buying?
It's quite normal to see company insiders, such as board members, trading in company stock, from time to time. However, most countries require that the company discloses such transactions to the market.
Insider transactions are not the most important thing when it comes to long-term investing. But logic dictates you should pay some attention to whether insiders are buying or selling shares. For example, a Harvard University study found that 'insider purchases earn abnormal returns of more than 6% per year'.
The Last 12 Months Of Insider Transactions At Shanta Gold
In the last twelve months, the biggest single sale by an insider was when the Independent Non-Executive Director, Robin Fryer, sold UK£158k worth of shares at a price of UK£0.15 per share. That means that even when the share price was below the current price of UK£0.15, an insider wanted to cash in some shares. 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. We note that the biggest single sale was 100% of Robin Fryer's holding. The only individual insider seller over the last year was Robin Fryer.
Happily, we note that in the last year insiders paid UK£312k for 1.89m shares. On the other hand they divested 1.07m shares, for UK£158k. Overall, Shanta Gold insiders were net buyers during 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!
Shanta Gold is not the only stock that insiders are buying. For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.
Insiders at Shanta Gold Have Sold Stock Recently
There was substantially more insider selling, than buying, of Shanta Gold shares over the last three months. In total, Independent Non-Executive Director Robin Fryer sold UK£158k worth of shares in that time. On the flip side, Independent Non-Executive Director Ketankumar Patel spent UK£41k on purchasing shares. Because the selling vastly outweighs the buying, we'd say this is a somewhat bearish sign.
For a common shareholder, it is worth checking how many shares are held by company insiders. I reckon it's a good sign if insiders own a significant number of shares in the company. It appears that Shanta Gold insiders own 9.7% of the company, worth about UK£16m. We've certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.
What Might The Insider Transactions At Shanta Gold Tell Us?
The stark truth for Shanta Gold is that there has been more insider selling than insider buying in the last three months. But we take heart from prior transactions. We like that insiders own a fair amount of the company. So we're not overly bothered by recent selling. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Shanta Gold. At Simply Wall St, we found 2 warning signs for Shanta Gold that deserve your attention before buying any shares.
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.
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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