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It is not uncommon to see companies perform well in the years after insiders buy shares. On the other hand, we'd be remiss not to mention that insider sales have been known to precede tough periods for a business. So shareholders might well want to know whether insiders have been buying or selling shares in Energy Technologies Limited (ASX:EGY).
What Is Insider Buying?
Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock in the company. However, such insiders must disclose their trading activities, and not trade on inside information.
Insider transactions are not the most important thing when it comes to long-term investing. But equally, we would consider it foolish to ignore insider transactions altogether. As Peter Lynch said, 'insiders might sell their shares for any number of reasons, but they buy them for only one: they think the price will rise'.
Energy Technologies Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider purchase was by Non-Executive Director Anthony Smith for AU$524k worth of shares, at about AU$0.08 per share. Even though the purchase was made at a significantly lower price than the recent price (AU$0.14), we still think insider buying is a positive. Because it occurred at a lower valuation, it doesn't tell us much about whether insiders might find today's price attractive.
Happily, we note that in the last year insiders paid AU$580k for 7.05m shares. But insiders sold 460.00k shares worth AU$66k. Overall, Energy Technologies insiders were net buyers during the last year. 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!
Energy Technologies is not the only stock that insiders are buying. For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.
Energy Technologies Insiders Are Selling The Stock
We have seen a bit of insider selling at Energy Technologies, over the last three months. The selling netted AU$66k for Non-Executive Director Anthony Smith. But at least we saw AU$41k worth of buying. While it's not great to see insider selling, the net amount sold isn't enough for us to want to read anything into it.
Insider Ownership of Energy Technologies
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. Insiders own 26% of Energy Technologies shares, worth about AU$6.4m. While this is a strong but not outstanding level of insider ownership, it's enough to indicate some alignment between management and smaller shareholders.
So What Does This Data Suggest About Energy Technologies Insiders?
Insider selling has just outweighed insider buying in the last three months. But the difference is small, and thus, not concerning. 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 Energy Technologies insiders are doubting the company, and they do own shares. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. Case in point: We've spotted 4 warning signs for Energy Technologies you should be aware of, and 2 of them shouldn't be ignored.
But note: Energy Technologies 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.
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