How Much Are Canadian Palladium Resources Inc. Insiders Spending On Buying Shares?

We often see insiders buying up shares in companies that perform well over the long term. The flip side of that is that there are more than a few examples of insiders dumping stock prior to a period of weak performance. So before you buy or sell Canadian Palladium Resources Inc. (CVE:LAN), you may well want to know whether insiders have been buying or selling

Do Insider Transactions Matter?

It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, most countries require that the company discloses such transactions to the market.

We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. But logic dictates you should pay some attention to whether insiders are buying or selling shares. As Peter Lynch said, ‘insiders might sell their shares for any number of reasons, but they buy them for only one: they think the price will rise.
The Last 12 Months Of Insider Transactions At Canadian Palladium Resources

In the last twelve months, the biggest single purchase by an insider was when insider Eric Sprott bought CA$1.5m worth of shares at a price of CA$0.12 per share. That means that even when the share price was higher than CA$0.075 (the recent price), an insider wanted to purchase shares. It’s very possible they regret the purchase, but it’s more likely they are bullish about the company. We always take careful note of the price insiders pay when purchasing shares. As a general rule, we feel more positive about a stock when an insider has bought shares at above current prices, because that suggests they viewed the stock as good value, even at a higher price. Eric Sprott was the only individual insider to buy shares in the last twelve months.

You can see the insider transactions (by 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!

TSXV:LAN Recent Insider Trading June 5th 2020

Insider Ownership of Canadian Palladium Resources
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. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. From our data, it seems that Canadian Palladium Resources insiders own 13% of the company, worth about CA$1.0m. Overall, this level of ownership isn’t that impressive, but it’s certainly better than nothing!

What Might The Insider Transactions At Canadian Palladium Resources Tell Us?
There haven’t been any insider transactions in the last three months — that doesn’t mean much. But insiders have shown more of an appetite for the stock, over the last year. While we have no worries about the insider transactions, we’d be more comfortable if they owned more Canadian Palladium Resources stock. 

In addition to knowing about insider transactions going on, it’s beneficial to identify the risks facing Canadian Palladium Resources. Be aware that Canadian Palladium Resources is showing 5 warning signs in our investment analysis, and 4 of those are significant…

- Source, Simply Wall St