Should You Be Worried About Insider Transactions At Buru Energy Limited (ASX:BRU)?

We often see insiders buying up shares in companies that perform well over the long term. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So shareholders might well want to know whether insiders have been buying or selling shares in Buru Energy Limited (ASX:BRU).

What Is Insider Buying?

It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, rules govern insider transactions, including certain disclosures.

We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. But equally, we would consider it foolish to ignore insider transactions altogether. For example, a Harvard University study found that ‘insider purchases earn abnormal returns of more than 6% per year.’

View our latest analysis for Buru Energy

Buru Energy Insider Transactions Over The Last Year

In the last twelve months, the biggest single sale by an insider was when Executive Chairman Eric Streitberg sold AU$2.1m worth of shares at a price of AU$0.25 per share. So what is clear is that an insider saw fit to sell at around the current price of AU$0.23. While their view may have changed since the sale, this is not a particularly positive fact. Arguably, insider selling at current prices should give us reason to reflect on whether the stock is fully valued at the moment. Eric Streitberg was the only individual insider to sell over the last year.

You can see the insider transactions 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!

ASX:BRU Insider Trading November 26th 18
ASX:BRU Insider Trading November 26th 18

For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

Does Buru Energy Boast High Insider Ownership?

Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. I reckon it’s a good sign if insiders own a significant number of shares in the company. Buru Energy insiders own 9.1% of the company, worth about AU$6.5m. Whilst better than nothing, we’re not overly impressed by these holdings.

So What Does This Data Suggest About Buru Energy Insiders?

An insider haven’t bought Buru Energy stock in the last three months, but they sure did sell some. Furthermore, transactions over the last twelve months dispel the notion that insiders won’t sell readily. When you consider that most companies have higher levels of insider ownership, we’re a little wary. So we’re not rushing to buy, to say the least. Of course, the future is what matters most. So if you are interested in Buru Energy, you should check out this free report on analyst forecasts for the company.

Of course Buru Energy may not be the best stock to buy. So you may wish to see this free collection of high quality companies.

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.