Yahoo Finance Grand Gulf Energy Limited (ASX:GGE) is up 53%, but insiders still continue to see a loss of AU$370k on their AU$1.5m investment
Insiders who purchased AU$1.5m worth of Grand Gulf Energy Limited (ASX:GGE) shares over the past year recouped some of their losses after price gained 53% last week. The purchase, however, has proven to be a pricey bet, with losses currently totalling AU$370k.
Although we don't think shareholders should simply follow insider transactions, logic dictates you should pay some attention to whether insiders are buying or selling shares.
See our latest analysis for Grand Gulf Energy
The Last 12 Months Of Insider Transactions At Grand Gulf Energy
Over the last year, we can see that the biggest insider purchase was by insider Timothy Neesham for AU$1.3m worth of shares, at about AU$0.069 per share. That means that even when the share price was higher than AU$0.029 (the recent price), an insider wanted to purchase shares. While their view may have changed since the purchase was made, this does at least suggest they have had confidence in the company's future. To us, it's very important to consider the price insiders pay for shares. It is encouraging to see an insider paid above the current price for shares, as it suggests they saw value, even at higher levels. The only individual insider to buy over the last year was Timothy Neesham.
Timothy Neesham bought a total of 38.84m shares over the year at an average price of AU$0.039. 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!
There are always plenty of stocks that insiders are buying. So if that suits your style you could check each stock one by one or you could take a look at this free list of companies. (Hint: insiders have been buying them).
Insider Ownership
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Grand Gulf Energy insiders own 43% of the company, currently worth about AU$19m based on the recent share price. This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.
So What Does This Data Suggest About Grand Gulf Energy Insiders?
It doesn't really mean much that no insider has traded Grand Gulf Energy shares in the last quarter. On a brighter note, the transactions over the last year are encouraging. With high insider ownership and encouraging transactions, it seems like Grand Gulf Energy insiders think the business has merit. 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. When we did our research, we found 5 warning signs for Grand Gulf Energy (2 are potentially serious!) that we believe deserve your full attention.
If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, that have HIGH return on equity 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.
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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.
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