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In spite of IPB Petroleum Limited's recent pullback, insiders still gained about AU$14k after buying earlier this year.

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IPB Petroleum Limited (ASX:IPB) insiders who acquired shares over the previous 12 months, can probably afford to ignore the recent 13% decline in the stock price. Even after accounting for the recent loss, the AU$497k worth of stock purchased by them is now worth AU$512k or in other words, their investment continues to give good returns.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we do think it is perfectly logical to keep tabs on what insiders are doing.

Check out our latest analysis for IPB Petroleum

The Last 12 Months Of Insider Transactions At IPB Petroleum

In the last twelve months, the biggest single purchase by an insider was when insider Philip Alan Naylor bought AU$373k worth of shares at a price of AU$0.038 per share. So it's clear an insider wanted to buy, even at a higher price than the current share price (being AU$0.02). 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. We always take careful note of the price insiders pay when purchasing shares. As a general rule, we feel more positive about a stock when an insider has bought shares at above current prices, because that suggests they viewed the stock as good value, even at a higher price. The only individual insider to buy over the last year was Philip Alan Naylor.

Philip Alan Naylor bought a total of 25.59m shares over the year at an average price of AU$0.019. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. By clicking on the graph below, you can see the precise details of each insider transaction!

insider-trading-volume
insider-trading-volume

IPB Petroleum 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.

Insider Ownership of IPB Petroleum

For a common shareholder, it is worth checking how many shares are held by company insiders. I reckon it's a good sign if insiders own a significant number of shares in the company. IPB Petroleum insiders own about AU$2.2m worth of shares. That equates to 33% of the company. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.

So What Do The IPB Petroleum Insider Transactions Indicate?

It is good to see the recent insider purchase. And an analysis of the transactions over the last year also gives us confidence. But we don't feel the same about the fact the company is making losses. Insiders likely see value in IPB Petroleum shares, given these transactions (along with notable insider ownership of the company). So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. When we did our research, we found 6 warning signs for IPB Petroleum (3 are a bit concerning!) that we believe deserve your full attention.

But note: IPB Petroleum 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. 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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