With Peako Up 33%, Insider Buyers Count Their Returns

Insiders who bought Peako Limited (ASX:PKO) stock in the last 12 months were richly rewarded last week. The company's market value increased by AU$1.1m as a result of the stock's 33% gain over the same period. In other words, the original AU$330.8k purchase is now worth AU$374.0k.

Although we don't think shareholders should simply follow insider transactions, logic dictates you should pay some attention to whether insiders are buying or selling shares.

The Last 12 Months Of Insider Transactions At Peako

The insider Andrew Wilson made the biggest insider purchase in the last 12 months. That single transaction was for AU$205k worth of shares at a price of AU$0.003 each. We do like to see buying, but this purchase was made at well below the current price of AU$0.004. 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.

Over the last year, we can see that insiders have bought 93.51m shares worth AU$331k. But insiders sold 25.18m shares worth AU$126k. Overall, Peako insiders were net buyers during the last year. They paid about AU$0.0035 on average. To my mind it is good that insiders have invested their own money in the company. But we must note that the investments were made at well below today's share price. 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!

Check out our latest analysis for Peako

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.

Peako Insiders Bought Stock Recently

At Peako,over the last quarter, we have observed quite a lot more insider buying than insider selling. Insiders spent AU$331k on shares. But insider Ernest Albers sold shares worth AU$126k. Insiders have spent more buying shares than they have selling, so on balance we think they are are probably optimistic.

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. Peako insiders own about AU$1.1m worth of shares. That equates to 26% of the company. We've certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.

What Might The Insider Transactions At Peako Tell Us?

It is good to see recent purchasing. 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. When combined with notable insider ownership, these factors suggest Peako insiders are well aligned, and that they may think the share price is too low. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Peako. Every company has risks, and we've spotted 5 warning signs for Peako you should know about.

But note: Peako 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 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.