IPB Petroleum Insider Confidence Rewarded, Stock Hits AU$7.1m Market Cap

IPB Petroleum Limited (ASX:IPB) insiders who bought shares over the past year were rewarded handsomely last week. The stock rose 25%, resulting in a AU$1.4m rise in the company's market capitalisation, translating to a gain of 74% on their initial investment. Put another way, the original AU$230.4k acquisition is now worth AU$400.0k.

While insider transactions are not the most important thing when it comes to long-term investing, we would consider it foolish to ignore insider transactions altogether.

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The Last 12 Months Of Insider Transactions At IPB Petroleum

Over the last year, we can see that the biggest insider purchase was by insider Martin Rowney for AU$88k worth of shares, at about AU$0.0073 per share. Even though the purchase was made at a significantly lower price than the recent price (AU$0.01), 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.

Martin Rowney bought 40.00m shares over the last 12 months at an average price of AU$0.0058. 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!

See our latest analysis for IPB Petroleum

There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of undervalued small cap companies that insiders are buying.

Does IPB Petroleum Boast High Insider Ownership?

I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with 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$3.4m worth of shares (which is 48% of the company). 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 Do The IPB Petroleum Insider Transactions Indicate?

It's certainly positive to see the recent insider purchase. And the longer term insider transactions also give us confidence. But we don't feel the same about the fact the company is making losses. Once you factor in the high insider ownership, it certainly seems like insiders are positive about IPB Petroleum. One for the watchlist, at least! So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. To assist with this, we've discovered 4 warning signs that you should run your eye over to get a better picture of IPB Petroleum.

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

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 of direct interests only, but not derivative transactions or indirect interests.

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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.