Bullish Signature Resources Insiders Loaded Up On CA$776.7k Of Stock
Usually, when one insider buys stock, it might not be a monumental event. But when multiple insiders are buying like they did in the case of Signature Resources Ltd. (CVE:SGU), that sends out a positive message to the company’s shareholders.
While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, logic dictates you should pay some attention to whether insiders are buying or selling shares.
The President John Denbow made the biggest insider purchase in the last 12 months. That single transaction was for CA$400k worth of shares at a price of CA$0.05 each. That means that an insider was happy to buy shares at around the current price of CA$0.055. Of course they may have changed their mind. But this suggests they are optimistic. We do always like to see insider buying, but it is worth noting if those purchases were made at well below today’s share price, as the discount to value may have narrowed with the rising price. In this case we’re pleased to report that the insider purchases were made at close to current prices.
While Signature Resources insiders bought shares during the last year, they didn’t sell. 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!
See our latest analysis for Signature Resources
There are always plenty of stocks that insiders are buying. If investing in lesser known companies is your style, you could take a look at this free list of companies. (Hint: insiders have been buying them).
Independent Chairman of the Board Paolo Lostritto bought just CA$6.7k worth of shares in that time. That’s not much at all. So it is hard to draw any conclusion about how insiders are feeling about the stock, from these recent trades.
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. A high insider ownership often makes company leadership more mindful of shareholder interests. Signature Resources insiders own about CA$4.4m worth of shares (which is 45% of the company). Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.
We note a that there has been a bit of insider buying recently (but no selling). The net investment is not enough to encourage us much. However, our analysis of transactions over the last year is heartening. It would be great to see more insider buying, but overall it seems like Signature Resources insiders are reasonably well aligned (owning significant chunk of the company’s shares) and optimistic for the future. So these insider transactions can help us build a thesis about the stock, but it’s also worthwhile knowing the risks facing this company. Every company has risks, and we’ve spotted 7 warning signs for Signature Resources (of which 6 are concerning!) you should know about.
If you would prefer to check out another company — one with potentially superior financials — then do not miss this free list of interesting companies, that have HIGH return on equity 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 of direct interests only, but not derivative transactions or indirect interests.
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.