Over the past year, many Agnico Eagle Mines Limited (NYSE:AEM) insiders sold a significant stake in the company which may have piqued investors' interest. When evaluating insider transactions, knowing whether insiders are buying is usually more beneficial than knowing whether they are selling, as the latter can be open to many interpretations. However, if numerous insiders are selling, shareholders should investigate more.

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.

Agnico Eagle Mines Insider Transactions Over The Last Year

Over the last year, we can see that the biggest insider sale was by the CEO, President & Director, Ammar Al-Joundi, for US$12m worth of shares, at about US$68.65 per share. That means that an insider was selling shares at slightly below the current price (US$73.28). As a general rule we consider it to be discouraging when insiders are selling below the current price, because it suggests they were happy with a lower valuation. 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. This single sale was 55% of Ammar Al-Joundi's stake. Notably Ammar Al-Joundi was also the biggest buyer, having purchased US$8.1m worth of shares.

Over the last year, we can see that insiders have bought 121.45k shares worth US$8.1m. But insiders sold 302.78k shares worth US$20m. All up, insiders sold more shares in Agnico Eagle Mines than they bought, over the last year. The chart below shows insider transactions (by companies and individuals) over the last year. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

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Insiders At Agnico Eagle Mines Have Sold Stock Recently

We've seen more insider selling than insider buying at Agnico Eagle Mines recently. We note insiders cashed in US$20m worth of shares. Meanwhile CEO, President & Director Ammar Al-Joundi bought US$7.5m worth. Since the selling really does outweigh the buying, we'd say that these transactions may suggest that some insiders feel the shares are not cheap.

Does Agnico Eagle Mines 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. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. It appears that Agnico Eagle Mines insiders own 0.1% of the company, worth about US$42m. We've certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.

So What Do The Agnico Eagle Mines Insider Transactions Indicate?

The insider sales have outweighed the insider buying, at Agnico Eagle Mines, in the last three months. And our longer term analysis of insider transactions didn't bring confidence, either. Insider ownership isn't particularly high, so this analysis makes us cautious about the company. So we'd only buy after careful consideration. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. In terms of investment risks, we've identified 4 warning signs with Agnico Eagle Mines and understanding them should be part of your investment process.

But note: Agnico Eagle Mines may not be the best stock to buy. So take a peek at this free list of interesting companies with high ROE and low debt.

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