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 we’ll take a look at whether insiders have been buying or selling shares in Painted Pony Energy Ltd. (TSE:PONY).
What Is Insider Buying?
It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, rules govern insider transactions, and certain disclosures are required.
We don’t think shareholders should simply follow insider transactions. But equally, we would consider it foolish to ignore insider transactions altogether. For example, a Harvard University study found that ‘insider purchases earn abnormal returns of more than 6% per year.’
Painted Pony Energy Insider Transactions Over The Last Year
While no particular insider transaction stood out, we can still look at the overall trading.
Over the last year, we can see that insiders have bought 55.90k shares worth CA$103k. In the last twelve months there was more buying than selling by Painted Pony Energy insiders. Their average price was about CA$1.84. I’d consider this a positive as it suggests insiders see value at around the current price, which is CA$1.34. You can see the insider transactions 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!
Painted Pony Energy is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Painted Pony Energy Insiders Bought Stock Recently
Over the last quarter, Painted Pony Energy insiders have spent a meaningful amount on shares. Overall, 2 insiders shelled out CA$78k for shares in the company — and none sold. This is a positive in our book as it implies some confidence.
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. Painted Pony Energy insiders own 1.8% of the company, currently worth about CA$4.0m based on the recent share price. This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.
What Might The Insider Transactions At Painted Pony Energy Tell Us?
It’s certainly positive to see the recent insider purchases. And the longer term insider transactions also give us confidence. But on the other hand, the company made a loss last year, which makes us a little cautious. On this analysis the only slight negative we see is the fairly low (overall) insider ownership; their transactions suggest that they are quite positive on Painted Pony Energy stock. Of course, the future is what matters most. So if you are interested in Painted Pony Energy, you should check out this free report on analyst forecasts for the company.
But note: Painted Pony Energy 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.
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 firstname.lastname@example.org.