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It is usually uneventful when a single insider buys stock. However, When quite a few insiders buy shares, as it happened in Canadian Gold Corp.'s (CVE:CGC) case, it's fantastic news for shareholders.
Although we don't think shareholders should simply follow insider transactions, we would consider it foolish to ignore insider transactions altogether.
See our latest analysis for Canadian Gold
The Last 12 Months Of Insider Transactions At Canadian Gold
Over the last year, we can see that the biggest insider purchase was by insider Robert McEwen for CA$100k worth of shares, at about CA$0.14 per share. Although we like to see insider buying, we note that this large purchase was at significantly below the recent price of CA$0.17. Because the shares were purchased at a lower price, this particular buy doesn't tell us much about how insiders feel about the current share price.
Canadian Gold insiders may have bought shares in the last year, but they didn't sell any. You can see the insider transactions (by companies and 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!
There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of undervalued small cap companies that insiders are buying.
Insider Ownership
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Canadian Gold insiders own about CA$11m worth of shares. That equates to 39% of the company. We've certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.
What Might The Insider Transactions At Canadian Gold Tell Us?
The fact that there have been no Canadian Gold insider transactions recently certainly doesn't bother us. However, our analysis of transactions over the last year is heartening. Overall we don't see anything to make us think Canadian Gold insiders are doubting the company, and they do own shares. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. To help with this, we've discovered 4 warning signs (3 are a bit concerning!) that you ought to be aware of before buying any shares in Canadian Gold.