Those following along with International Petroleum Corporation (TSE:IPCO) will no doubt be intrigued by the recent purchase of shares by Lukas Lundin, Chairman of the Board of the company, who spent a stonking US$700k on stock at an average price of US$4.67. While that only increased their holding size by 5%, it is still a big swing by our standards.
International Petroleum Insider Transactions Over The Last Year
Lead Director Charles Ashley Heppenstall made the biggest insider purchase in the last 12 months. That single transaction was for CA$4.1m worth of shares at a price of CA$8.85 each. That means that an insider was happy to buy shares at above the current price of CA$4.34. While their view may have changed since the purchase was made, this does at least suggest they have had confidence in the company’s future. In our view, the price an insider pays for shares is very important. Generally speaking, it catches our eye when insiders have purchased shares at above current prices, as it suggests they believed the shares were worth buying, even at a higher price. We note that Charles Ashley Heppenstall was both the biggest buyer and the biggest seller.
Over the last year, we can see that insiders have bought 676k shares worth CA$5.2m. But insiders sold 515k shares worth CA$4.4m. Overall, International Petroleum insiders were net buyers last year. Their average price was about CA$7.64. I’d consider this a positive as it suggests insiders see value at around the current price. You can see a visual depiction of insider transactions (by individuals) over the last 12 months, below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Insiders own 6.4% of International Petroleum shares, worth about CA$46m. 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 International Petroleum Insider Transactions Indicate?
It’s certainly positive to see the recent insider purchases. And an analysis of the transactions over the last year also gives us confidence. Given that insiders also own a fair bit of International Petroleum we think they are probably pretty confident of a bright future. If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its future.
But note: International Petroleum 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, but not derivative transactions.
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