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.
While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we do think it is perfectly logical to keep tabs on what insiders are doing.
See our latest analysis for New Found Gold
New Found Gold Insider Transactions Over The Last Year
In the last twelve months, the biggest single purchase by an insider was when insider Eric Sprott bought CA$57m worth of shares at a price of CA$8.45 per share. That means that an insider was happy to buy shares at above the current price of CA$6.19. While their view may have changed since the purchase was made, this does at least suggest they have had confidence in the company’s future. To us, it’s very important to consider the price insiders pay for shares. 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.
While New Found Gold insiders bought shares during the last year, they didn’t sell. The chart below shows insider transactions (by companies and individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
New Found Gold is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
New Found Gold Insiders Bought Stock Recently
It’s good to see that New Found Gold insiders have made notable investments in the company’s shares. insider Eric Sprott spent CA$116k on stock, and there wasn’t any selling. This could be interpreted as suggesting a positive outlook.
Insider Ownership
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. We usually like to see fairly high levels of insider ownership. Insiders own 5.5% of New Found Gold shares, worth about CA$60m. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.
So What Does This Data Suggest About New Found Gold Insiders?
The recent insider purchase is heartening. And the longer term insider transactions also give us confidence. But on the other hand, the company made a loss during the last year, which makes us a little cautious. When combined with notable insider ownership, these factors suggest New Found Gold insiders are well aligned, and that they may think the share price is too low. 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. For example, New Found Gold has 5 warning signs (and 2 which don’t sit too well with us) we think you should know about.
But note: New Found Gold may not be the best stock to buy. So take a peek at this free list of interesting companies with high ROE 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.
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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.
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