Don't Ignore The Insider Selling In Thungela Resources

We'd be surprised if Thungela Resources Limited (JSE:TGA) shareholders haven't noticed that the CEO & Executive Director, T. Madondo, recently sold R3.1m worth of stock at R118 per share. The eyebrow raising move amounted to a reduction of 14% in their holding.

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The Last 12 Months Of Insider Transactions At Thungela Resources

Over the last year, we can see that the biggest insider sale was by the CFO & Executive Director, Gideon Smith, for R6.5m worth of shares, at about R87.50 per share. So it's clear an insider wanted to take some cash off the table, even below the current price of R120. We generally consider it a negative if insiders have been selling, especially if they did so below the current price, because it implies that they considered a lower price to be reasonable. While insider selling is not a positive sign, we can't be sure if it does mean insiders think the shares are fully valued, so it's only a weak sign. We note that the biggest single sale was only 31% of Gideon Smith's holding. Notably Gideon Smith was also the biggest buyer, having purchased R3.4m worth of shares.

In the last twelve months insiders purchased 21.88k shares for R3.4m. But they sold 133.32k shares for R15m. All up, insiders sold more shares in Thungela Resources than they bought, over the last year. 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!

Check out our latest analysis for Thungela Resources

I will like Thungela Resources better if I see some big insider buys. While we wait, check out this free list of undervalued and small cap stocks with considerable, recent, insider buying.

Insider Ownership

For a common shareholder, it is worth checking how many shares are held by company 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 Thungela Resources insiders own 0.9% of the company, worth about R135m. Whilst better than nothing, we're not overly impressed by these holdings.

What Might The Insider Transactions At Thungela Resources Tell Us?

An insider sold stock recently, but they haven't been buying. Despite some insider buying, the longer term picture doesn't make us feel much more positive. The company boasts high insider ownership, but we're a little hesitant, given the history of share sales. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. Every company has risks, and we've spotted 3 warning signs for Thungela Resources you should know about.

Of course Thungela Resources may not be the best stock to buy. So you may wish to see this free collection of high quality companies.

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.