While Greatland Gold plc (LON:GGP) shareholders have enjoyed a good week with stock up 17%, they need remain vigilant. In spite of the relatively cheap prices, insiders made the decision to sell UK£2.1m worth of stock in the last 12 months. This could be a warning indicator of vulnerabilities in the future.
While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we would consider it foolish to ignore insider transactions altogether.
The Independent Senior Non-Executive Director, Michael Borrelli, made the biggest insider sale in the last 12 months. That single transaction was for UK£1.6m worth of shares at a price of UK£0.083 each. We generally don't like to see insider selling, but the lower the sale price, the more it concerns us. The silver lining is that this sell-down took place above the latest price (UK£0.069). So it may not tell us anything about how insiders feel about the current share price.
Greatland Gold insiders didn't buy any shares over the last year. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. By clicking on the graph below, you can see the precise details of each insider transaction!
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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. I reckon it's a good sign if insiders own a significant number of shares in the company. From looking at our data, insiders own UK£2.1m worth of Greatland Gold stock, about 0.6% of the company. We prefer to see high levels of insider ownership.
The fact that there have been no Greatland Gold insider transactions recently certainly doesn't bother us. Our analysis of Greatland Gold insider transactions leaves us unenthusiastic. We also note that, as far as we can see, insider ownership is fairly low, compared to other companies. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Greatland Gold. When we did our research, we found 3 warning signs for Greatland Gold (1 can't be ignored!) that we believe deserve your full attention.
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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 of direct interests only, but not derivative transactions or indirect interests.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.