I like to read the posts here for info, and I hadn't seen this on here yet, so I thought I would post it. It appeared only on the homepage of baystreet.ca.
"3:41 PM MGM ENERGY CORP. (MGX) Henry Sykes purchased 280.000 shares at 12.5 cents on 02-20-13 -- bringing his total stake in the company to 734,039 shares."
It's only on the news feed, so it will likely disappear soon from the home page. Here's a link to the google cache, where it may hang around a bit longer:
https://webcache.googleusercontent.com/search?q=cache:mzgJvtnAt08J:www.baystreet.ca/+&cd=1&hl=en&ct=clnk&gl=us&client=firefox-a
I'm not sure I understand the nuances of interpreting insider trading, but it would seem this could mean one of three and-a-half things:
1) Sykes has exercised his options now so that he can sell his shares at the current price because the well results were bad and he'll make more money this way than by selling his shares after they plummet or by simply letting them expire. This seems unlikely because the present falue of those shares is less than $90000. Given the daily volume, he probably would make less than $50000 by doing this, making it a silly risk to exercise the option at all.
2) If the options were set to expire soon, he chose to exercise them because the share price would never fall below 13 cents even if they found out the Canol wasn't economic. There's no downside risk in exercising the option, whereas if he allows the option to expire, he loses something because, again, he could probably sell all of his shares for over 13 cents anyway.
3) The options are expiring soon and he knows that a few months or years from now, he'll be glad he bought those shares at 12.5 cents a piece.
3.5) The options aren't expiring any time soon, but he's exercising them because, yet again, there's no downside risk.
But this made me think about looking more into what other insiders are doing. In the US, (legal) insider selling is documented and freely available. I have access to such information through my account services for with the company I use to make trades, but they do not provide these records for Canadian companies and I don't know where I would find it online, if it exists at all. If anyone does have access to this information and can confirm that there is no insider selling going on, that would confirm that #1, above, is not a possibility.
Other than that, I actually take this as a neutral to good sign. While I don't think he's taking on any downside risk, making it difficult to interpret this action as a positive, he is investing $30,000, and increasing his stake by 50%, at a time when he, as the President of the company, is one of the few who knows for certain what is going on at the well site.
...WAIT! There's one more possibility...If we follow farml's logic, it would seem that Sykes exercised the option so that he could donate the shares to the town of Norman Wells, NO the whole region, so that when the stock explodes, the people of Norman Wells will be so awash in oil money (I mean, more awash), that they can then purchase an ample supply of natural gas to last them 1000 winters. They would be so grateful to Sykes for his gesture, that they would allow MGM to drill anywhere they wanted without permits! Just my honest opinion...do your own due diligence ;)