It is not uncommon to see companies perform well in the years after insiders buy shares. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So before you buy or sell First Vanadium Corp. (CVE:FVAN), you may well want to know whether insiders have been buying or selling.
What Is Insider Buying?
Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock in the company. However, rules govern insider transactions, and certain disclosures are required.
We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. But it is perfectly logical to keep tabs on what insiders are doing. As Peter Lynch said, ‘insiders might sell their shares for any number of reasons, but they buy them for only one: they think the price will rise.
First Vanadium Insider Transactions Over The Last Year
In the last twelve months, the biggest single purchase by an insider was when President Paul Cowley bought CA$195k worth of shares at a price of CA$0.40 per share. That means that even when the share price was higher than CA$0.20 (the recent price), an insider wanted to purchase shares. 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. We note that Paul Cowley was both the biggest buyer and the biggest seller.
Happily, we note that in the last year insiders paid CA$259k for 648.00k shares. But they sold 658000 shares for CA$257k. In total, First Vanadium insiders bought more than they sold over the last year. You can see the insider transactions (by individuals) over the last year depicted in the chart below. By clicking on the graph below, you can see the precise details of each insider transaction!
Insider Ownership
Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Based on our data, First Vanadium insiders have about 2.0% of the stock, worth approximately CA$167k. However, it’s possible that insiders might have an indirect interest through a more complex structure. We consider this fairly low insider ownership.
What Might The Insider Transactions At First Vanadium Tell Us?
It doesn’t really mean much that no insider has traded First Vanadium shares in the last quarter. But insiders have shown more of an appetite for the stock, over the last year. We’d like to see bigger individual holdings. However, we don’t see anything to make us think First Vanadium insiders are doubting 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. For example, First Vanadium has 5 warning signs (and 2 which can’t be ignored) we think you should know about.
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