With Vulcan Energy Resources Up 15%, Insider Buyers Count Their Returns

Insiders who bought Vulcan Energy Resources Limited (ASX:VUL) stock in the last 12 months were richly rewarded last week. The company's market value increased by AU$86m as a result of the stock's 15% gain over the same period. In other words, the original €197.9k purchase is now worth €229.5k.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we would consider it foolish to ignore insider transactions altogether.

Check out our latest analysis for Vulcan Energy Resources

Vulcan Energy Resources Insider Transactions Over The Last Year

Over the last year, we can see that the biggest insider purchase was by Non-Executive Deputy Chairman of the Board Gavin Rezos for AU$135k worth of shares, at about AU$3.67 per share. That means that an insider was happy to buy shares at around the current price of AU$3.81. That means they have been optimistic about the company in the past, though they may have changed their mind. 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 Vulcan Energy Resources insiders decided to buy shares at close to current prices.

Vulcan Energy Resources insiders may have bought shares in the last year, but they didn't sell any. Their average price was about AU$3.28. 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. 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!

There are always plenty of stocks that insiders are buying. So if that suits your style you could check each stock one by one or you could take a look at this free list of companies. (Hint: insiders have been buying them).

Insider Ownership

Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. We usually like to see fairly high levels of insider ownership. It's great to see that Vulcan Energy Resources insiders own 26% of the company, worth about AU$168m. I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.

So What Does This Data Suggest About Vulcan Energy Resources Insiders?

The fact that there have been no Vulcan Energy Resources insider transactions recently certainly doesn't bother us. However, our analysis of transactions over the last year is heartening. Judging from their transactions, and high insider ownership, Vulcan Energy Resources insiders feel good about the company's future. 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. To help with this, we've discovered 4 warning signs (1 doesn't sit too well with us!) that you ought to be aware of before buying any shares in Vulcan Energy Resources.

But note: Vulcan Energy Resources 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.