Africa Energy Corp. (CVE:AFE) Insiders Have Been Selling

By
Simply Wall St
Published
May 27, 2021
TSXV:AFE
Source: Shutterstock

We often see insiders buying up shares in companies that perform well over the long term. 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 Africa Energy Corp. (CVE:AFE).

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 in the company. However, most countries require that the company discloses such transactions to the market.

Insider transactions are not the most important thing when it comes to long-term investing. But logic dictates you should pay some attention to whether insiders are buying or selling shares. As Peter Lynch said, 'insiders might sell their shares for any number of reasons, but they buy them for only one: they think the price will rise'.

Check out our latest analysis for Africa Energy

The Last 12 Months Of Insider Transactions At Africa Energy

Over the last year, we can see that the biggest insider sale was by the Independent Director, John Bentley, for CA$2.6m worth of shares, at about CA$3.34 per share. While insider selling is a negative, to us, it is more negative if the shares are sold at a lower price. It's of some comfort that this sale was conducted at a price well above the current share price, which is CA$0.24. So it may not tell us anything about how insiders feel about the current share price.

All up, insiders sold more shares in Africa Energy than they bought, over the last year. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

insider-trading-volume
TSXV:AFE Insider Trading Volume May 28th 2021

For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

Does Africa Energy Boast High Insider Ownership?

For a common shareholder, it is worth checking how many shares are held by company insiders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Based on our data, Africa Energy insiders have about 0.9% of the stock, worth approximately CA$3.0m. But they may have an indirect interest through a corporate structure that we haven't picked up on. I generally like to see higher levels of ownership.

So What Does This Data Suggest About Africa Energy Insiders?

The fact that there have been no Africa Energy insider transactions recently certainly doesn't bother us. The insider transactions at Africa Energy are not inspiring us to buy. And usually insiders own more stock in the company, according to our data. So while it's helpful to know what insiders are doing in terms of buying or selling, it's also helpful to know the risks that a particular company is facing. At Simply Wall St, we've found that Africa Energy has 4 warning signs (2 make us uncomfortable!) that deserve your attention before going any further with your analysis.

But note: Africa 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.

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.

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