Selling Ionik Shares at a Lower Price Than Current Market Value May Have Been a Costly Mistake for Insiders

Even though Ionik Corporation (CVE:INIK) has fallen by 17% over the past week , insiders who sold US$1.1m worth of stock over the past year have had less luck. Insiders might have been better off holding onto their shares, given that the average selling price of US$0.12 is still below the current share price.

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.

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Ionik Insider Transactions Over The Last Year

In the last twelve months, the biggest single sale by an insider was when the insider, Smokey Burn, sold CA$526k worth of shares at a price of CA$0.13 per share. We generally don't like to see insider selling, but the lower the sale price, the more it concerns us. It's of some comfort that this sale was conducted at a price well above the current share price, which is CA$0.05. So it may not shed much light on insider confidence at current levels.

Over the last year, we can see that insiders have bought 2.92m shares worth CA$336k. But insiders sold 8.85m shares worth CA$1.1m. In total, Ionik insiders sold more than they bought over the last year. The average sell price was around US$0.12. Insider selling doesn't make us excited to buy. But we note that the selling, on average, was at well above the recently traded price of CA$0.05. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

Check out our latest analysis for Ionik

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Does Ionik Boast High Insider Ownership?

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. A high insider ownership often makes company leadership more mindful of shareholder interests. It appears that Ionik insiders own 36% of the company, worth about CA$14m. While this is a strong but not outstanding level of insider ownership, it's enough to indicate some alignment between management and smaller shareholders.

What Might The Insider Transactions At Ionik Tell Us?

There haven't been any insider transactions in the last three months -- that doesn't mean much. Our analysis of Ionik insider transactions leaves us cautious. But it's good to see that insiders own shares in the company. While it's good to be aware of 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, Ionik has 4 warning signs (and 3 which are a bit unpleasant) we think you should know about.

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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.