It is not uncommon to see companies perform well in the years after insiders buy shares. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So before you buy or sell Surge Energy Inc. (TSE:SGY), you may well want to know whether insiders have been buying or selling.
What Is Insider Selling?
It’s quite normal to see company insiders, such as board members, trading in company stock, from time to time. However, rules govern insider transactions, and certain disclosures are required.
Insider transactions are not the most important thing when it comes to long-term investing. 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.’
Surge Energy Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider purchase was by President Paul Colborne for CA$147k worth of shares, at about CA$2.68 per share. That means that an insider was happy to buy shares at above the current price of CA$1.22. 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. We always take careful note of the price insiders pay when purchasing shares. As a general rule, we feel more positive about a stock if insiders have bought shares at above current prices, because that suggests they viewed the stock as good value, even at a higher price.
In the last twelve months insiders purchased 611k shares for CA$1.1m. But insiders sold 22805 shares worth CA$51k. Overall, Surge Energy insiders were net buyers last year. Their average price was about CA$1.87. These transactions suggest that insiders have considered the current price attractive. You can see the insider transactions (by individuals) 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!
Insiders at Surge Energy Have Bought Stock Recently
There was some insider buying at Surge Energy over the last quarter. Insiders bought CA$47k worth of shares in that time. We like it when there are only buyers, and no sellers. But the amount invested in the last three months isn’t enough for us too put much weight on it, as a single factor.
Insider Ownership of Surge Energy
For a common shareholder, it is worth checking how many shares are held by company insiders. I reckon it’s a good sign if insiders own a significant number of shares in the company. Our data indicates that Surge Energy insiders own about CA$13m worth of shares (which is 3.3% of the company). We do generally prefer see higher levels of insider ownership.
What Might The Insider Transactions At Surge Energy Tell Us?
Our data shows a little insider buying, but no selling, in the last three months. Overall the buying isn’t worth writing home about. On a brighter note, the transactions over the last year are encouraging. Insiders do have a stake in Surge Energy and their transactions don’t cause us concern. 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.
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.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.