Although Discovery Silver Corp. (TSE:DSV) has fallen 16% in the past week, insiders who sold CA$577,000 worth of shares over the past 12 months have been less successful. Insiders may have been better off holding onto their shares, as the average selling price of CA$1.02 is still below the current share price.

Although insider transactions are not the most important thing in long-term investing, we would consider it foolish to ignore insider transactions entirely.

Check out our latest analysis for Discovery Silver

Discovery Silver’s insider transactions in the last year

Over the past year, we’ve seen the largest insider purchase come from insider Eric Sprott, who purchased CA$350,000 worth of stock at around CA$0.90 per share. This means that an insider was willing to buy stock even when the stock price was above CA$0.70 (the current price). Their opinion may have changed since then, but it at least shows that they were bullish at the time. We always pay close attention to the price insiders pay when they buy stocks. Generally, we’re more bullish on a stock when insiders have bought shares at a price above the current price, because it suggests they still viewed the stock as worthwhile at a higher price.

Over the last twelve months, insiders bought 417,600 shares for CA$367,000. But they sold 563,220 shares for CA$577,000. Overall, insiders sold more Discovery Silver shares than they bought over the last year. Below is a visual representation of insider transactions (by companies and individuals) over the last 12 months. If you click on the graph below, you can see the exact details of each insider transaction!

If you are like me, you will not don’t want to miss this free List of small-cap stocks that are not only bought by insiders but are also attractively valued.

Discovery Silver insiders sell the stock

Discovery Silver has seen significant insider selling over the past three months. Specifically, insiders sold CA$536,000 worth of shares during that time, and we saw no purchases. Overall, this makes us a little cautious, but it’s not the be-all and end-all.

Insider ownership of Discovery Silver

I like to look at how many shares insiders own in a company to get an idea of ​​how well they work with insiders. Typically, the higher the insider ownership, the more likely it is that insiders are motivated to build the company for the long term. It appears that Discovery Silver insiders own 24% of the company, worth about CA$83 million. While that’s a strong but not outstanding level of insider ownership, it’s enough to suggest some alignment between management and smaller shareholders.

So what do the insider transactions at Discovery Silver mean?

Insiders haven’t bought Discovery Silver shares in the last three months, but there has been some selling. Despite some insider buying, the long-term picture doesn’t make us much more optimistic. Insiders own shares, but given the sales history, we’re still pretty cautious. We’d exercise some caution before buying! While it’s good to know what’s going on with the insider’s ownership and transactions, we make sure to also consider the risks a stock faces before making an investment decision. To that end, you should read about the 4 warning signs we discovered some at Discovery Silver (including 2 that are a bit unpleasant).

Naturally Discovery Silver may not be the best stock to buy. You may want 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 regulator. Currently, we only consider open market transactions and private disposals of direct holdings, but not derivative transactions or indirect holdings.

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This Simply Wall St article is of a general nature. We comment solely on the basis of historical data and analyst forecasts, using an unbiased methodology. Our articles do not constitute financial advice. It is not a recommendation to buy or sell any stock and does not take into account your objectives or financial situation. Our goal is to provide you with long-term analysis based on fundamental data. Note that our analysis may not take into account the latest price-sensitive company announcements or qualitative materials. Simply Wall St does not hold any of the stocks mentioned.