IKN

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When insider selling makes sense

This blog has recently made mention of the insider selling done by Patrick Sheridan, CEO of Guyana Goldfields (GUY.to). So when that selling continued last week, both this humble scribe and others (who mailed in with headsups…thanks people) made note of it. But it did make me wonder a bit more and look a little deeper at the recent filings from Sheridan and from the searchings at SEDI this little table was put together.
Patrick Sheridan: Insider Trades of Guyana Gold in 2010
date type of transaction amount price shares left
23/02/2010 51 – Exercise of options 250,000 2.02 4,847,334
22/04/2010 51 – Exercise of options 250,000 2 5,097,334
23/04/2010 10 – Acquisition or disposition in the public market 30,000 6.8
23/04/2010 10 – Acquisition or disposition in the public market 30,000 6.8
23/04/2010 10 – Acquisition or disposition in the public market -30,000 6.8 5,067,334
26/04/2010 10 – Acquisition or disposition in the public market -5,000 6.75 5,062,334
26/04/2010 10 – Acquisition or disposition in the public market -5,000 6.75 5,057,334
26/04/2010 10 – Acquisition or disposition in the public market -2,100 6.65 5,055,234
27/04/2010 10 – Acquisition or disposition in the public market -5,000 6.7 5,050,234
28/04/2010 10 – Acquisition or disposition in the public market -13,900 6.65 5,036,334
30/04/2010 10 – Acquisition or disposition in the public market -10,000 6.7 5,026,334
30/04/2010 10 – Acquisition or disposition in the public market -5,000 6.75 5,021,334
30/04/2010 10 – Acquisition or disposition in the public market -5,000 6.78 5,016,334
30/04/2010 10 – Acquisition or disposition in the public market -5,000 6.8 5,011,334
30/04/2010 10 – Acquisition or disposition in the public market -5,000 6.85 5,006,334
03/05/2010 10 – Acquisition or disposition in the public market -10,000 7 4,996,334
03/05/2010 10 – Acquisition or disposition in the public market -3,500 7.01 4,992,834
06/05/2010 10 – Acquisition or disposition in the public market -20,000 6.9 4,972,834
06/05/2010 10 – Acquisition or disposition in the public market -5,000 6.92 4,967,834
10/05/2010 10 – Acquisition or disposition in the public market -20,000 7 4,947,834
11/05/2010 10 – Acquisition or disposition in the public market -10,000 7.29 4,937,834
11/05/2010 10 – Acquisition or disposition in the public market -10,000 7.33 4,927,834
12/05/2010 10 – Acquisition or disposition in the public market -11,600 7.48 4,916,234
12/05/2010 10 – Acquisition or disposition in the public market -8,200 7.45 4,908,034
12/05/2010 10 – Acquisition or disposition in the public market -20,000 7.39 4,888,034
12/05/2010 10 – Acquisition or disposition in the public market -300 7.41 4,887,734
12/05/2010 10 – Acquisition or disposition in the public market -600 7.4 4,887,134
17/05/2010 10 – Acquisition or disposition in the public market -5,700 6.9 4,881,434

What we have here is basically the following:

  • Sheridan is a dude with about 4.6 million shares of GUY.to at end 2009.
  • He then exercises two 250k chunks of options at $2 a shot to take his holdings up to 5.1m or so.
  • He’s since then sold 185,900 of the recently exercised shares, at prices fluctuating between $6.50 and $7.50 approx, for gross proceeds of $1.3m
  • He now has a touch under 4.9m shares owned.
Now, it seem to me that he’s sold the shares that he’s sold this year to pay for those two options exercisings which cost him a total of $1m or so (because he has to stump up the exercise price). Now yeah, for sure he’s shelled out $1m and grossed $1.3m from the trades, leaving him $300k gross to the good, but in essence what we have is a man that has been keen on getting his shares held number UP and not down in a way that doesn’t weigh on his own pocket (after all, not all CEOs are multimillionaires).

I’m not saying that the pattern above from Sheridan is the best possible. I am saying that it’s not really a bad thing going on here and the selling is understandable, it’s not a red flag signal for the stock and, in the long run, shows that the CEO is keen on raising his stake in GUY.to. Not all insider sellers are crooks, not all insider sales are immediate selling signals and the thoughts floated here about CEO Sheridan fit 100% with anecdotals from trusted sources that say the GUY CEO is one of the good guys. DYODD.

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