ADF Group Inc T.DRX

Peter Hodson in Financial Post

[Possibleidiot01]

This advertisement has not loaded yet, but your article continues below.

Trending

1. Gap narrows between variable and fixed-rate mortgages after Bank of Canada rate cut

   

2. CEO in hot water with CRA after misunderstanding RRSP, pension plan rules

   

3. Canada has a record number of skilled tradespeople but not enough construction activity

   

4. Posthaste: Bank of Canada interest rates could come down faster than we thought

   

5. Howard Levitt: Here are the 10 biggest mistakes employees make

   

Article content

 

Insider selling is not that important

 

Insider buying is very important. There is usually only one reason for an insider to buy shares in their own company: they want to make money. Insider buying is a key sign that investors should look for. But selling? That’s a different rule. There are dozens, even hundreds, of reasons why an insider might sell their shares. They need to disclose the transaction, but there is no need for them to report why they are selling.
 

 

Let’s take a recent example. ADF Group Inc. is a structural steel company listed on the Toronto Stock Exchange. In June, insiders sold $48-million worth of stock, which caused a lot of concern amongst investors. But there are two offsets to this concern.

 

First, it was the company that bought the insiders’ shares (to be cancelled). The company was clearly comfortable buying them. Second, the stock is up 252 per cent in the past year. Even with what was a large sale, the stock price gain means insiders still have more actual money at risk than they did last year. In other words, this sale shouldn’t have caused investors to panic.