We often see insiders buying up shares in companies that perform well over the long term. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So before you buy or sell Cenovus Energy Inc. (TSE:CVE), you may well want to know whether insiders have been buying or selling.
What Is Insider Buying?
It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, most countries require that the company discloses such transactions to the market.
We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. But equally, we would consider it foolish to ignore insider transactions altogether. For example, a Colombia University study found that ‘insiders are more likely to engage in open market purchases of their own company’s stock when the firm is about to reveal new agreements with customers and suppliers’.
See our latest analysis for Cenovus Energy
Cenovus Energy Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider purchase was by CEO, President & Director Alexander Pourbaix for CA$983k worth of shares, at about CA$9.10 per share. So it’s clear an insider wanted to buy, at around the current price. Of course they may have changed their mind. But this suggests they are optimistic. We generally consider it a positive if insiders have been buying on market, even if the share price has increased a bit since then.
Over the last year, we can see that insiders have bought 189.51k shares worth CA$1.9m. In the last twelve months there was more buying than selling by Cenovus Energy insiders. The average buy price was around CA$10.00. These transactions suggest that insiders have considered the current price of CA$9.38 attractive. The chart below shows insider transactions over the last year. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).
Insiders at Cenovus Energy Have Bought Stock Recently
It’s good to see that Cenovus Energy insiders have made notable investments in the company’s shares. Overall, 5 insiders shelled out CA$1.4m for shares in the company — and none sold. That shows some optimism about the company’s future.
Insider Ownership of Cenovus Energy
I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with insiders. We usually like to see fairly high levels of insider ownership. Cenovus Energy insiders own 0.2% of the company, currently worth about CA$24m based on the recent share price. Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.
So What Does This Data Suggest About Cenovus Energy Insiders?
It is good to see recent purchasing. We also take confidence from the longer term picture of insider transactions. 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 Cenovus Energy shares, given these transactions (along with notable insider ownership of the company). Therefore, you should should definitely take a look at this FREE report showing analyst forecasts for Cenovus Energy.
Of course Cenovus Energy may not be the best stock to buy. So you may wish to see this free collection of high quality companies.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.