Quite a few Entrée Resources Ltd. (TSE:ETG) insiders sold their shares over the past year, which may be a cause for concern. When analyzing insider transactions, it is usually more valuable to know whether insiders are buying versus knowing if they are selling, as the latter sends an ambiguous message. However, shareholders should take a deeper look if several insiders are selling stock over a specific time period.
Although we don't think shareholders should simply follow insider transactions, we do think it is perfectly logical to keep tabs on what insiders are doing.
Entrée Resources Insider Transactions Over The Last Year
In the last twelve months, the biggest single sale by an insider was when the VP of Legal Affairs & Corporate Secretary, Susan McLeod, sold CA$300k worth of shares at a price of CA$3.00 per share. So we know that an insider sold shares at around the present share price of CA$2.85. We generally don't like to see insider selling, but the lower the sale price, the more it concerns us. In this case, the big sale took place at around the current price, so it's not too bad (but it's still not a positive).
Over the last year, we can see that insiders have bought 97.00k shares worth CA$243k. But they sold 421.30k shares for CA$1.1m. All up, insiders sold more shares in Entrée Resources than they bought, over the last year. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
Check out our latest analysis for Entrée Resources
For those who like to find hidden gems this free list of small cap companies with recent insider purchasing, could be just the ticket.
Insiders At Entrée Resources Have Sold Stock Recently
We've seen more insider selling than insider buying at Entrée Resources recently. In that time, insider Stephen Scott dumped CA$166k worth of shares. On the other hand we note President Christopher Adams bought CA$75k worth of shares. Generally this level of net selling might be considered a bit bearish.
Does Entrée Resources Boast High Insider Ownership?
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. Entrée Resources insiders own about CA$14m worth of shares. That equates to 2.5% 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.
What Might The Insider Transactions At Entrée Resources Tell Us?
The insider sales have outweighed the insider buying, at Entrée Resources, in the last three months. 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! So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. Be aware that Entrée Resources is showing 4 warning signs in our investment analysis, and 3 of those make us uncomfortable...
But note: Entrée Resources may not be the best stock to buy. So take a peek at this free list of interesting companies with high ROE 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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