While Amerigo Resources Ltd. (TSE:ARG) shareholders have had a good week with the stock up 10%, they shouldn't let their guards down. Even though stock prices were relatively low, insiders elected to sell US$6.1m worth of stock in the last year, which could indicate some expected downturn.
While insider transactions are not the most important thing when it comes to long-term investing, we do think it is perfectly logical to keep tabs on what insiders are doing.
Amerigo Resources Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider sale was by the Independent Director, George Ireland, for CA$1.4m worth of shares, at about CA$2.35 per share. That means that an insider was selling shares at slightly below the current price (CA$6.87). As a general rule we consider it to be discouraging when insiders are selling below the current price, because it suggests they were happy with a lower valuation. However, while insider selling is sometimes discouraging, it's only a weak signal. It is worth noting that this sale was only 4.9% of George Ireland's holding.
Amerigo Resources insiders didn't buy any shares 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!
Check out our latest analysis for Amerigo Resources
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Insiders At Amerigo Resources Have Sold Stock Recently
The last quarter saw substantial insider selling of Amerigo Resources shares. In total, insiders sold CA$1.3m 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.
Does Amerigo Resources Boast High Insider Ownership?
Many investors like to check how much of a company is owned by insiders. I reckon it's a good sign if insiders own a significant number of shares in the company. Amerigo Resources insiders own about CA$125m worth of shares. That equates to 12% of the company. 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 Does This Data Suggest About Amerigo Resources Insiders?
Insiders haven't bought Amerigo Resources stock in the last three months, but there was some selling. Looking to the last twelve months, our data doesn't show any insider buying. But since Amerigo Resources is profitable and growing, we're not too worried by this. While insiders do own a lot of shares in the company (which is good), our analysis of their transactions doesn't make us feel confident about the company. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. For instance, we've identified 3 warning signs for Amerigo Resources (1 is a bit unpleasant) you should be aware of.
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.
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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.