Resources & Energy Group Gains 20%, Insider Trades Reap Benefit

Last week, Resources & Energy Group Limited (ASX:REZ) insiders, who had purchased shares in the previous 12 months were rewarded handsomely. The shares increased by 20% last week, resulting in a AU$3.5m increase in the company's market worth, implying a 69% gain on their initial purchase. As a result, the stock they originally bought for AU$292.4k is now worth AU$493.0k.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, logic dictates you should pay some attention to whether insiders are buying or selling shares.

Check out our latest analysis for Resources & Energy Group

Resources & Energy Group Insider Transactions Over The Last Year

In fact, the recent purchase by Carl Charalambous was the biggest purchase of Resources & Energy Group shares made by an insider individual in the last twelve months, according to our records. That implies that an insider found the current price of AU$0.03 per share to be enticing. Of course they may have changed their mind. But this suggests they are optimistic. We do always like to see insider buying, but it is worth noting if those purchases were made at well below today's share price, as the discount to value may have narrowed with the rising price. Happily, the Resources & Energy Group insiders decided to buy shares at close to current prices.

Resources & Energy Group insiders may have bought shares in the last year, but they didn't sell any. The average buy price was around AU$0.018. We don't deny that it is nice to see insiders buying stock in the company. But we must note that the investments were made at well below today's share price. The chart below shows insider transactions (by companies and individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

There are always plenty of stocks that insiders are buying. If investing in lesser known companies is your style, you could take a look at this free list of companies. (Hint: insiders have been buying them).

Insiders At Resources & Energy Group Have Bought Stock Recently

It's good to see that Resources & Energy Group insiders have made notable investments in the company's shares. We can see that insider Carl Charalambous paid AU$162k for shares in the company. No-one sold. This makes one think the business has some good points.

Does Resources & Energy Group Boast High 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. I reckon it's a good sign if insiders own a significant number of shares in the company. Insiders own 27% of Resources & Energy Group shares, worth about AU$5.7m. While this is a strong but not outstanding level of insider ownership, it's enough to indicate some alignment between management and smaller shareholders.

So What Do The Resources & Energy Group Insider Transactions Indicate?

The recent insider purchase is heartening. And an analysis of the transactions over the last year also gives us confidence. 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 Resources & Energy Group 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 Resources & Energy Group. For instance, we've identified 4 warning signs for Resources & Energy Group (1 is significant) you should be aware of.

If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, that have HIGH return on equity 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.