We often see insiders buying up shares in companies that perform well over the long term. On the other hand, we’d be remiss not to mention that insider sales have been known to precede tough periods for a business. So shareholders might well want to know whether insiders have been buying or selling shares in Surge Energy Inc. (TSE:SGY).
Do Insider Transactions Matter?
It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, such insiders must disclose their trading activities, and not trade on inside information.
We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. But logic dictates you should pay some attention to whether insiders are buying or selling shares. For example, a Harvard University study found that ‘insider purchases earn abnormal returns of more than 6% per year.’
Surge Energy Insider Transactions Over The Last Year
President Paul Colborne made the biggest insider purchase in the last 12 months. That single transaction was for CA$148k worth of shares at a price of CA$2.72 each. That means that even when the share price was higher, an insider wanted to purchase shares. Their view may have changed since then, but at least it shows they felt optimistic at the time. We generally consider it a positive if insiders have been buying on market, even above the current price.
Happily, we note that in the last year insiders paid CA$2.1m for 935.37k shares. But insiders sold 22.81k shares worth CA$51k. In the last twelve months there was more buying than selling by Surge Energy insiders. The average buy price was around CA$2.21. This is nice to see since it implies that insiders might see value around current prices (around CA$1.50). You can see the insider transactions over the last year depicted in the chart below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
Surge Energy is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Insiders at Surge Energy Have Bought Stock Recently
At Surge Energy,over the last quarter, we have observed quite a lot more insider buying than insider selling. Insiders spent CA$595k on shares. But we did see Controller Rod Monden sell shares worth CA$13k. The buying outweighs the selling, which suggests that insiders may believe the company will do well in the future.
Insider Ownership of Surge Energy
For a common shareholder, it is worth checking how many shares are held by company insiders. We usually like to see fairly high levels of insider ownership. Surge Energy insiders own about CA$16m worth of shares (which is 3.7% of the company). 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 Do The Surge Energy Insider Transactions Indicate?
It is good to see recent purchasing. We also take confidence from the longer term picture of insider transactions. But we don’t feel the same about the fact the company is making losses. Insiders likely see value in Surge Energy shares, given these transactions (along with notable insider ownership of the company). 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.
If you would prefer to check out another company — one with potentially superior financials — then do not miss this free list of interesting companies, that have HIGH return on equity 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.