In the last year, multiple insiders have substantially increased their holdings of New Found Gold Corp. (CVE:NFG) stock, indicating that insiders' optimism about the company's prospects has increased.
Although we don't think shareholders should simply follow insider transactions, logic dictates you should pay some attention to whether insiders are buying or selling shares.
View our latest analysis for New Found Gold
New Found Gold Insider Transactions Over The Last Year
The insider Eric Sprott made the biggest insider purchase in the last 12 months. That single transaction was for CA$48m worth of shares at a price of CA$9.60 each. That means that an insider was happy to buy shares at above the current price of CA$8.00. It's very possible they regret the purchase, but it's more likely they are bullish about the company. In our view, the price an insider pays for shares is very important. 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.
Happily, we note that in the last year insiders paid CA$98m for 12.37m shares. But insiders sold 1.33m shares worth CA$7.6m. Overall, New Found Gold insiders were net buyers during the last year. The average buy price was around CA$7.89. These transactions show that insiders have confidence to invest their own money in the stock, albeit at slightly below the recent price. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
insider-trading-volume
There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of growing companies that insiders are buying.
Does New Found Gold 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. A high insider ownership often makes company leadership more mindful of shareholder interests. It's great to see that New Found Gold insiders own 28% of the company, worth about CA$371m. This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.
So What Do The New Found Gold Insider Transactions Indicate?
The fact that there have been no New Found Gold insider transactions recently certainly doesn't bother us. On a brighter note, the transactions over the last year are encouraging. With high insider ownership and encouraging transactions, it seems like New Found Gold insiders think the business has merit. While we like knowing what's going on with the insider's ownership and transactions, we make sure to also consider what risks are facing a stock before making any investment decision. When we did our research, we found 3 warning signs for New Found Gold (2 can't be ignored!) that we believe deserve your full attention.
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, but not derivative transactions.