It is not uncommon to see companies perform well in the years after insiders buy shares. The flip side of that is that there are more than a few examples of insiders dumping stock prior to a period of weak performance. So before you buy or sell Kelt Exploration Ltd. (TSE:KEL), you may well want to know whether insiders have been buying or selling.
What Is Insider Buying?
Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock on the market. However, such insiders must disclose their trading activities, and not trade on inside information.
Insider transactions are not the most important thing when it comes to long-term investing. But it is perfectly logical to keep tabs on what insiders are doing. For example, a Harvard University study found that ‘insider purchases earn abnormal returns of more than 6% per year.’
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The Last 12 Months Of Insider Transactions At Kelt Exploration
Over the last year, we can see that the biggest insider purchase was by CEO, President & Director David Wilson for CA$1.2m worth of shares, at about CA$4.75 per share. That means that an insider was happy to buy shares at around the current price. 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 any event it’s generally a positive if insiders are buying shares at around the current price.
In the last twelve months insiders purchased 591.24k shares for CA$3.0m. But they sold 187.00k for CA$1.6m. In the last twelve months there was more buying than selling by Kelt Exploration insiders. The average buy price was around CA$5.11. These transactions suggest that insiders have considered the current price of CA$4.82 attractive. You can see a visual depiction of insider transactions (by individuals) over the last 12 months, below. By clicking on the graph below, you can see the precise details of each insider transaction!
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 Kelt Exploration Have Bought Stock Recently
Over the last three months, we’ve seen significant insider buying at Kelt Exploration. In total, insiders bought CA$2.2m worth of shares in that time, and we didn’t record any sales whatsoever. That shows some optimism about the company’s future.
For a common shareholder, it is worth checking how many shares are held by company insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. Kelt Exploration insiders own about CA$118m worth of shares. That equates to 13% of the company. 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 Kelt Exploration Insider Transactions Indicate?
It’s certainly positive to see the recent insider purchases. We also take confidence from the longer term picture of insider transactions. But on the other hand, the company made a loss last year, which makes us a little cautious. When combined with notable insider ownership, these factors suggest Kelt Exploration insiders are well aligned, and quite possibly think the share price is too low. That’s what I like to see! 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.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting 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 email@example.com.