Australia markets closed
  • ALL ORDS

    7,592.70
    +107.50 (+1.44%)
     
  • AUD/USD

    0.7516
    -0.0026 (-0.35%)
     
  • ASX 200

    7,342.20
    +106.90 (+1.48%)
     
  • OIL

    73.52
    -0.14 (-0.19%)
     
  • GOLD

    1,779.60
    -3.30 (-0.19%)
     
  • BTC-AUD

    43,411.47
    -807.69 (-1.83%)
     
  • CMC Crypto 200

    783.58
    -66.77 (-7.85%)
     

Should You Take Comfort From Insider Transactions At Calima Energy Limited (ASX:CE1)?

  • Oops!
    Something went wrong.
    Please try again later.
·4-min read
  • Oops!
    Something went wrong.
    Please try again later.

We've lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. The flip side of that is that there are more than a few examples of insiders dumping stock prior to a period of weak performance. So we'll take a look at whether insiders have been buying or selling shares in Calima Energy Limited (ASX:CE1).

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, most countries require that the company discloses such transactions to the market.

We don't think shareholders should simply follow insider transactions. But logic dictates you should pay some attention to whether insiders are buying or selling shares. For example, a Columbia University study found that 'insiders are more likely to engage in open market purchases of their own company’s stock when the firm is about to reveal new agreements with customers and suppliers'.

See our latest analysis for Calima Energy

The Last 12 Months Of Insider Transactions At Calima Energy

In the last twelve months, the biggest single purchase by an insider was when Non-Executive Director Alan Stein bought AU$281k worth of shares at a price of AU$0.012 per share. So it's clear an insider wanted to buy, even at a higher price than the current share price (being AU$0.007). Their view may have changed since then, but at least it shows they felt optimistic at the time. We always take careful note of the price insiders pay when purchasing shares. It is generally more encouraging if they paid above the current price, as it suggests they saw value, even at higher levels. Notably Alan Stein was also the biggest seller.

Happily, we note that in the last year insiders paid AU$346k for 33.47m shares. But they sold 23.25m shares for AU$277k. In the last twelve months there was more buying than selling by Calima Energy insiders. The average buy price was around AU$0.01. These transactions suggest that insiders have considered the current price attractive. The chart below shows insider transactions (by companies and individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!

insider-trading-volume
insider-trading-volume

There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of growing companies that insiders are buying.

Insider Ownership

Many investors like to check how much of a company is owned by insiders. I reckon it's a good sign if insiders own a significant number of shares in the company. Calima Energy insiders own about AU$5.1m worth of shares. That equates to 33% of the company. While this is a strong but not outstanding level of insider ownership, it's enough to indicate some alignment between management and smaller shareholders.

What Might The Insider Transactions At Calima Energy Tell Us?

The fact that there have been no Calima Energy insider transactions recently certainly doesn't bother us. But insiders have shown more of an appetite for the stock, over the last year. Overall we don't see anything to make us think Calima Energy insiders are doubting the company, and they do own shares. So while it's helpful to know what insiders are doing in terms of buying or selling, it's also helpful to know the risks that a particular company is facing. For instance, we've identified 4 warning signs for Calima Energy (2 don't sit too well with us) you should be aware of.

But note: Calima Energy 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, but not derivative transactions.

This article by Simply Wall St is general in nature. 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 (at) simplywallst.com.

Our goal is to create a safe and engaging place for users to connect over interests and passions. In order to improve our community experience, we are temporarily suspending article commenting