Resources & Energy Group Gains 45%, Insider Trades Reap Benefit

Resources & Energy Group Limited (ASX:REZ) insiders who bought shares over the past year were rewarded handsomely last week. The stock rose 45%, resulting in a AU$3.1m rise in the company's market capitalisation, translating to a gain of 33% on their initial investment. Put another way, the original AU$130.0k acquisition is now worth AU$173.3k.

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

View our latest analysis for Resources & Energy Group

Resources & Energy Group Insider Transactions Over The Last Year

In the last twelve months, the biggest single purchase by an insider was when CEO & Director John Moore bought AU$100k worth of shares at a price of AU$0.012 per share. Even though the purchase was made at a significantly lower price than the recent price (AU$0.016), we still think insider buying is a positive. 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.

While Resources & Energy Group insiders bought shares during the last year, they didn't sell. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. By clicking on the graph below, you can see the precise details of each insider transaction!

Resources & Energy Group 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.

Resources & Energy Group Insiders Bought Stock Recently

It's good to see that Resources & Energy Group insiders have made notable investments in the company's shares. In total, insiders bought AU$130k worth of shares in that time, and we didn't record any sales whatsoever. This makes one think the business has some good points.

Does Resources & Energy Group Boast High Insider Ownership?

Many investors like to check how much of a company is owned by insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. It appears that Resources & Energy Group insiders own 21% of the company, worth about AU$2.1m. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.

What Might The Insider Transactions At Resources & Energy Group Tell Us?

It's certainly positive to see the recent insider purchases. And an analysis of the transactions over the last year also gives us confidence. However, we note that the company didn't make a profit over the last twelve months, which makes us cautious. Insiders likely see value in Resources & Energy Group shares, given these transactions (along with notable insider ownership of the company). So while it's helpful to know what insiders are doing in terms of buying or selling, it's also helpful to know the risks that a particular company is facing. Case in point: We've spotted 4 warning signs for Resources & Energy Group you should be aware of, and 2 of these don't sit too well with us.

But note: Resources & Energy Group 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com