Are Insiders Selling HEXO Corp. (TSE:HEXO) Stock?

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It is not uncommon to see companies perform well in the years after insiders buy shares. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So we'll take a look at whether insiders have been buying or selling shares in HEXO Corp. (TSE:HEXO).

What Is Insider Selling?

It's quite normal to see company insiders, such as board members, trading in company stock, from time to time. However, such insiders must disclose their trading activities, and not trade on inside information.

We don't think shareholders should simply follow insider transactions. But equally, we would consider it foolish to ignore insider transactions altogether. For example, a Harvard University study found that 'insider purchases earn abnormal returns of more than 6% per year.'

Check out our latest analysis for HEXO

HEXO Insider Transactions Over The Last Year

In the last twelve months, the biggest single sale by an insider was when Chairman of the Board Michael Munzar sold CA$1.3m worth of shares at a price of CA$7.75 per share. That means that even when the share price was below the current price of CA$8.74, an insider wanted to cash in some shares. Even though it doesn't necessarily mean anything, that's certainly not a positive sign, in our book. As a general rule we consider it to be discouraging when insiders are selling below the current price. Please note, however, that this single sale was just 8% of Michael Munzar's stake.

Over the last year we saw more insider selling of HEXO shares, than buying. They sold for an average price of about CA$6.03. It's not particularly great to see insiders were selling shares at below recent prices. Of course, the sales could be motivated for a multitude of reasons, so we shouldn't jump to conclusions. The chart below shows insider transactions (by individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!

If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.

HEXO Insiders Are Selling The Stock

The last three months saw significant insider selling at HEXO. In total, Vice-President of Corporate & Social Responsibility Terence Lake sold CA$357k worth of shares in that time, and we didn't record any purchases whatsoever. In light of this it's hard to argue that all the directors think that the shares are a bargain.

Insider Ownership of HEXO

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. A high insider ownership often makes company leadership more mindful of shareholder interests. HEXO insiders own 8.0% of the company, currently worth about CA$148m based on the recent share price. Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.

So What Does This Data Suggest About HEXO Insiders?

An insider sold stock recently, but they haven't been buying. Zooming out, the longer term picture doesn't give us much comfort. The company boasts high insider ownership, but we're a little hesitant, given the history of share sales. Of course, the future is what matters most. So if you are interested in HEXO, you should check out this free report on analyst forecasts for the company.