Stock Analysis

Are Insiders Buying Otto Energy Limited (ASX:OEL) Stock?

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ASX:OEL
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We've lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So we'll take a look at whether insiders have been buying or selling shares in Otto Energy Limited (ASX:OEL).

Do Insider Transactions Matter?

It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, such insiders must disclose their trading activities, and not trade on inside information.

We don't think shareholders should simply follow insider transactions. But equally, we would consider it foolish to ignore insider transactions altogether. 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'.

Check out our latest analysis for Otto Energy

Otto Energy Insider Transactions Over The Last Year

The Non-Executive Director Hans Johann Jetter made the biggest insider purchase in the last 12 months. That single transaction was for AU$174k worth of shares at a price of AU$0.006 each. Although we like to see insider buying, we note that this large purchase was at significantly below the recent price of AU$0.009. While it does suggest insiders consider the stock undervalued at lower prices, this transaction doesn't tell us much about what they think of current prices.

Happily, we note that in the last year insiders paid AU$488k for 81.34m shares. On the other hand they divested 530.00k shares, for AU$3.2k. Overall, Otto Energy insiders were net buyers during the last year. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

insider-trading-volume
ASX:OEL Insider Trading Volume March 2nd 2021

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

Insider Ownership

Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. We usually like to see fairly high levels of insider ownership. Our data indicates that Otto Energy insiders own about AU$3.8m worth of shares (which is 8.8% of the company). We do note, however, it is possible insiders have an indirect interest through a private company or other corporate structure. Whilst better than nothing, we're not overly impressed by these holdings.

So What Do The Otto Energy Insider Transactions Indicate?

It doesn't really mean much that no insider has traded Otto Energy shares in the last quarter. However, our analysis of transactions over the last year is heartening. The transactions are fine but it'd be more encouraging if Otto Energy insiders bought more shares in the company. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Otto Energy. When we did our research, we found 4 warning signs for Otto Energy (2 are concerning!) that we believe deserve your full attention.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting 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, but not derivative transactions.

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