Selling AU$6.5m Of KGL Resources Stock Rewarded Insiders

Despite a 18% gain in KGL Resources Limited's (ASX:KGL) stock price this week, shareholders shouldn't let up. The fact that insiders chose to dispose of AU$6.5m worth of stock in the past 12 months even though prices were relatively low could be indicative of some anticipated weakness.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, logic dictates you should pay some attention to whether insiders are buying or selling shares.

Trump has pledged to "unleash" American oil and gas and these 15 US stocks have developments that are poised to benefit.

The Last 12 Months Of Insider Transactions At KGL Resources

In the last twelve months, the biggest single sale by an insider was when the insider, Denis Wood, sold AU$6.5m worth of shares at a price of AU$0.13 per share. That means that an insider was selling shares at slightly below the current price (AU$0.23). 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. However, while insider selling is sometimes discouraging, it's only a weak signal. We note that the biggest single sale was 100% of Denis Wood's holding. The only individual insider seller over the last year was Denis Wood.

In the last twelve months insiders purchased 374.76k shares for AU$36k. But they sold 50.12m shares for AU$6.5m. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

See our latest analysis for KGL Resources

If you are like me, then you will not want to miss this free list of small cap stocks that are not only being bought by insiders but also have attractive valuations.

Insider Ownership Of KGL Resources

Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Our data suggests KGL Resources insiders own 1.6% of the company, worth about AU$2.9m. But they may have an indirect interest through a corporate structure that we haven't picked up on. We consider this fairly low insider ownership.

So What Do The KGL Resources Insider Transactions Indicate?

It doesn't really mean much that no insider has traded KGL Resources shares in the last quarter. Our analysis of KGL Resources insider transactions leaves us unenthusiastic. And usually insiders own more stock in the company, according to our data. 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. Our analysis shows 5 warning signs for KGL Resources (2 are a bit concerning!) and we strongly recommend you look at these before investing.

Of course KGL 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.