Despite the fact that Discovery Silver Corp.’s (TSE:DSV) value has dropped 16% in the last week insiders who sold CA$577k worth of stock in the past 12 months have had less success. Insiders might have been better off holding onto their shares, given that the average selling price of CA$1.02 is still below the current share price.
While insider transactions are not the most important thing when it comes to long-term investing, we would consider it foolish to ignore insider transactions altogether.
See our latest analysis for Discovery Silver
Discovery Silver Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider purchase was by insider Eric Sprott for CA$350k worth of shares, at about CA$0.90 per share. That means that even when the share price was higher than CA$0.70 (the recent price), an insider wanted to purchase shares. Their view may have changed since then, but at least it shows they felt optimistic at the time. 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.
In the last twelve months insiders purchased 417.60k shares for CA$367k. But they sold 563.22k shares for CA$577k. All up, insiders sold more shares in Discovery Silver than they bought, over the last year. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. By clicking on the graph below, you can see the precise details of each insider transaction!
If you are like me, then you will not want to miss this free list of small cap stocks that are not only being bought by insiders but also have attractive valuations.
Discovery Silver Insiders Are Selling The Stock
The last three months saw significant insider selling at Discovery Silver. Specifically, insiders ditched CA$536k worth of shares in that time, and we didn’t record any purchases whatsoever. Overall this makes us a bit cautious, but it’s not the be all and end all.
Insider Ownership Of Discovery Silver
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. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. It appears that Discovery Silver insiders own 24% of the company, worth about CA$83m. While this is a strong but not outstanding level of insider ownership, it’s enough to indicate some alignment between management and smaller shareholders.
So What Do The Discovery Silver Insider Transactions Indicate?
Insiders haven’t bought Discovery Silver stock in the last three months, but there was some selling. Despite some insider buying, the longer term picture doesn’t make us feel much more positive. Insiders own shares, but we’re still pretty cautious, given the history of sales. We’d practice some caution before buying! While it’s good to be aware of what’s going on with the insider’s ownership and transactions, we make sure to also consider what risks are facing a stock before making any investment decision. To that end, you should learn about the 4 warning signs we’ve spotted with Discovery Silver (including 2 which are a bit unpleasant).
Of course Discovery Silver 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 of direct interests only, but not derivative transactions or indirect interests.
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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.