We often see insiders buying up shares in companies that perform well over the long term. On the other hand, we'd be remiss not to mention that insider sales have been known to precede tough periods for a business. So before you buy or sell DGO Gold Limited (ASX:DGO), you may well want to know whether insiders have been buying or selling.
What Is Insider Selling?
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, most countries require that the company discloses such transactions to the market.
Insider transactions are not the most important thing when it comes to long-term investing. But it is perfectly logical to keep tabs on what insiders are doing. For example, a Columbia University study found that 'insiders are more likely to engage in open market purchases of their own company’s stock when the firm is about to reveal new agreements with customers and suppliers'.
View our latest analysis for DGO Gold
The Last 12 Months Of Insider Transactions At DGO Gold
The Executive Director Jeffrey Parncutt made the biggest insider purchase in the last 12 months. That single transaction was for AU$973k worth of shares at a price of AU$1.35 each. Although we like to see insider buying, we note that this large purchase was at significantly below the recent price of AU$2.78. While it does suggest insiders consider the stock undervalued at lower prices, this transaction doesn't tell us much about what they think of current prices.
Happily, we note that in the last year insiders paid AU$2.2m for 1.61m shares. But they sold 118.33k shares for AU$175k. In total, DGO Gold insiders bought more than they sold over the last year. The chart below shows insider transactions (by companies and individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!
DGO Gold is not the only stock that insiders are buying. For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.
DGO Gold Insiders Bought Stock Recently
At DGO Gold,over the last quarter, we have observed quite a lot more insider buying than insider selling. In total, two insiders bought AU$1.2m worth of shares in that time. On the other hand, Executive Director Jeffrey Parncutt netted AU$170k by selling. The buying outweighs the selling, which suggests that insiders may believe the company will do well in the future.
Insider Ownership
For a common shareholder, it is worth checking how many shares are held by company 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. DGO Gold insiders own about AU$64m worth of shares. That equates to 37% 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.