While Greenfire Resources Ltd. (NYSE:GFR) shareholders have enjoyed a good week with stock up 15%, they need remain vigilant. Even though stock prices were relatively low, insiders elected to sell CA$26m worth of stock in the last year, which could indicate some expected downturn.

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.

Greenfire Resources Insider Transactions Over The Last Year

In the last twelve months, the biggest single sale by an insider was when the Independent Director, Jonathan Klesch, sold US$26m worth of shares at a price of US$5.44 per share. That means that even when the share price was below the current price of US$7.30, an insider wanted to cash in some shares. 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 86% of Jonathan Klesch's holding.

Over the last year, we can see that insiders have bought 286.37k shares worth US$1.6m. But insiders sold 4.76m shares worth US$26m. Over the last year we saw more insider selling of Greenfire Resources shares, than buying. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. By clicking on the graph below, you can see the precise details of each insider transaction!

If you like to buy stocks that insiders are buying, rather than selling, then you might just love this free list of companies. (Hint: Most of them are flying under the radar).

Insiders At Greenfire Resources Have Sold Stock Recently

Over the last three months, we've seen notably more insider selling, than insider buying, at Greenfire Resources. In that time, insiders dumped US$26m worth of shares. On the other hand we note insiders bought US$1.6m worth of shares , as previously mentioned . Because the selling vastly outweighs the buying, we'd say this is a somewhat bearish sign.

Insider Ownership Of Greenfire Resources

For a common shareholder, it is worth checking how many shares are held by company insiders. We usually like to see fairly high levels of insider ownership. It's great to see that Greenfire Resources insiders own 46% of the company, worth about US$215m. I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.

So What Does This Data Suggest About Greenfire Resources Insiders?

The insider sales have outweighed the insider buying, at Greenfire Resources, in the last three months. Zooming out, the longer term picture doesn't give us much comfort. It is good to see high insider ownership, but the insider selling leaves us cautious. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. Be aware that Greenfire Resources is showing 4 warning signs in our investment analysis, and 3 of those make us uncomfortable...

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting 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.

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