We’ve lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So before you buy or sell Valeura Energy Inc. (TSE:VLE), 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.
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 Colombia University study found that ‘insiders are more likely to engage in open market purchases of their own company’s stock when the firm is about to reveal new agreements with customers and suppliers’.
Valeura Energy Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider sale was by Donald Shepherd for CA$1.6m worth of shares, at about CA$5.04 per share. That is hardly a positive sign, even though it took place above the latest price (CA$3.48). So it may not shed much light on insider confidence at current levels.
Happily, we note that in the last year insiders paid CA$555k for 150.99k shares. But they sold 2.16m for CA$9.4m. Over the last year we saw more insider selling of Valeura Energy shares, than buying. The average sell price was around CA$4.34. We don’t gain much confidence from insider selling near the recent share price of CA$3.48. While some insiders have decided to take some money off the table, we wouldn’t put too much weight on this fact. You can see a visual depiction of insider transactions 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!
I will like Valeura Energy better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
Insider Ownership of Valeura Energy
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Valeura Energy insiders own 12% of the company, currently worth about CA$36m 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 Valeura Energy Tell Us?
There haven’t been any insider transactions in the last three months — that doesn’t mean much. Our analysis of Valeura Energy insider transactions leaves us cautious. But it’s good to see that insiders own shares in the company. Therefore, you should should definitely take a look at this FREE report showing analyst forecasts for Valeura Energy.
But note: Valeura 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 email@example.com.