With Kinetiko Energy Up 25%, Insider Buyers Count Their Returns

Last week, Kinetiko Energy Limited (ASX:KKO) insiders, who had purchased shares in the previous 12 months were rewarded handsomely. The shares increased by 25% last week, resulting in a AU$32m increase in the company's market worth, implying a 82% gain on their initial purchase. In other words, the original AU$486.4k purchase is now worth AU$886.8k.

While insider transactions are not the most important thing when it comes to long-term investing, logic dictates you should pay some attention to whether insiders are buying or selling shares.

See our latest analysis for Kinetiko Energy

The Last 12 Months Of Insider Transactions At Kinetiko Energy

The Non-Executive Director Donald Mzolisa Ncube made the biggest insider purchase in the last 12 months. That single transaction was for AU$231k worth of shares at a price of AU$0.06 each. Even though the purchase was made at a significantly lower price than the recent price (AU$0.11), 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.

In the last twelve months Kinetiko Energy insiders were buying shares, but not selling. 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!

Kinetiko Energy is not the only stock that insiders are buying. For those who like to find small cap companies at attractive valuations, this free list of growing companies with recent insider purchasing, could be just the ticket.

Have Kinetiko Energy Insiders Traded Recently?

We saw some Kinetiko Energy insider buying shares in the last three months. Non-Executive Director Robert Scharnell purchased AU$10k worth of shares in that period. We like it when there are only buyers, and no sellers. However, in this case the amount invested recently is quite small.

Does Kinetiko Energy Boast High Insider Ownership?

Many investors like to check how much of a company is owned by insiders. I reckon it's a good sign if insiders own a significant number of shares in the company. It's great to see that Kinetiko Energy insiders own 51% of the company, worth about AU$81m. Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.

So What Do The Kinetiko Energy Insider Transactions Indicate?

Insider purchases may have been minimal, in the last three months, but there was no selling at all. Overall the buying isn't worth writing home about. On a brighter note, the transactions over the last year are encouraging. It would be great to see more insider buying, but overall it seems like Kinetiko Energy insiders are reasonably well aligned (owning significant chunk of the company's shares) and optimistic for the future. 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 that end, you should learn about the 3 warning signs we've spotted with Kinetiko Energy (including 2 which make us uncomfortable).

Of course Kinetiko Energy 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.