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Recent gains in Erdene Resource Development Corporation (TSE:ERD) help add back some value on insider purchases worth CA$5.7m, still down CA$727k

Insiders who bought CA$5.7m worth of Erdene Resource Development Corporation (TSE:ERD) stock in the last year recovered part of their losses as the stock rose by 19% last week. The purchase, however, has proven to be a pricey bet, with losses currently totalling CA$727k.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we do think it is perfectly logical to keep tabs on what insiders are doing.

See our latest analysis for Erdene Resource Development

The Last 12 Months Of Insider Transactions At Erdene Resource Development

In the last twelve months, the biggest single purchase by an insider was when insider Eric Sprott bought CA$3.6m worth of shares at a price of CA$0.41 per share. So it's clear an insider wanted to buy, even at a higher price than the current share price (being CA$0.32). While their view may have changed since the purchase was made, this does at least suggest they have had confidence in the company's future. We always take careful note of the price insiders pay when purchasing shares. As a general rule, we feel more positive about a stock if insiders have bought shares at above current prices, because that suggests they viewed the stock as good value, even at a higher price.

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While Erdene Resource Development insiders bought shares during the last year, they didn't sell. They paid about CA$0.36 on average. These transactions suggest that insiders have considered the current price attractive. 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!

insider-trading-volume
insider-trading-volume

There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of growing companies that insiders are buying.

Insiders at Erdene Resource Development Have Bought Stock Recently

Over the last quarter, Erdene Resource Development insiders have spent a meaningful amount on shares. In total, insiders bought CA$2.0m worth of shares in that time, and we didn't record any sales whatsoever. That shows some optimism about the company's future.

Insider Ownership of Erdene Resource Development

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. Erdene Resource Development insiders own about CA$20m worth of shares. That equates to 20% of the company. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.

So What Does This Data Suggest About Erdene Resource Development Insiders?

It's certainly positive to see the recent insider purchases. And the longer term insider transactions also give us confidence. But we don't feel the same about the fact the company is making losses. Insiders likely see value in Erdene Resource Development shares, given these transactions (along with notable insider ownership of the company). In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Erdene Resource Development. To that end, you should learn about the 4 warning signs we've spotted with Erdene Resource Development (including 2 which are a bit concerning).

Of course Erdene Resource Development may not be the best stock to buy. So you may wish to see this free collection of high quality 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.

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