We often see insiders buying up shares in companies that perform well over the long term. 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 Africa Energy Corp. (CVE:AFE).
What Is Insider Selling?
It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, rules govern insider transactions, and certain disclosures are required.
Insider transactions are not the most important thing when it comes to long-term investing. But it is perfectly logical to keep tabs on what insiders are doing. 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'.
The Last 12 Months Of Insider Transactions At Africa Energy
The insider Charles Ashley Heppenstall made the biggest insider purchase in the last 12 months. That single transaction was for CA$662k worth of shares at a price of CA$0.32 each. We do like to see buying, but this purchase was made at well below the current price of CA$0.40. Because the shares were purchased at a lower price, this particular buy doesn't tell us much about how insiders feel about the current share price.
In the last twelve months insiders purchased 3.69m shares for CA$963k. But insiders sold 700.00k shares worth CA$170k. In total, Africa Energy insiders bought more than they sold over the last year. They paid about CA$0.26 on average. It is certainly positive to see that insiders have invested their own money in the company. However, we do note that they were buying at significantly lower prices than today's share price. 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!
Africa Energy 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.
Insiders at Africa Energy Have Bought Stock Recently
Over the last three months, we've seen significantly more insider buying, than insider selling, at Africa Energy. In total, two insiders bought CA$238k worth of shares in that time. On the other hand, Chief Financial Officer Jeromie Kufflick netted CA$170k by selling. Insiders have spent more buying shares than they have selling, so on balance we think they are are probably optimistic.
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. I reckon it's a good sign if insiders own a significant number of shares in the company. Our data suggests Africa Energy insiders own 1.6% of the company, worth about CA$4.9m. But they may have an indirect interest through a corporate structure that we haven't picked up on. We consider this fairly low insider ownership.
So What Does This Data Suggest About Africa Energy Insiders?
It's certainly positive to see the recent insider purchases. We also take confidence from the longer term picture of insider transactions. But on the other hand, the company made a loss during the last year, which makes us a little cautious. We would certainly prefer see higher levels of insider ownership but analysis of the insider transactions suggests that Africa Energy insiders are expecting a bright future. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Africa Energy. In terms of investment risks, we've identified 3 warning signs with Africa Energy and understanding these should be part of your investment process.
But note: Africa 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.
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