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

It is not uncommon to see companies perform well in the years after insiders buy shares. 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 Africa Energy Corp. (CVE:AFE).

What Is Insider Selling?

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 don't think shareholders should simply follow insider transactions. But equally, we would consider it foolish to ignore insider transactions altogether. For example, a Columbia 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'.

Check out our latest analysis for Africa Energy

Africa Energy Insider Transactions Over The Last Year

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. We generally don't like to see insider selling, but the lower the sale price, the more it concerns us. The good news is that this large sale was at well above current price of CA$0.31. So it may not shed much light on insider confidence at current levels.

In the last twelve months insiders purchased 1.45m shares for CA$261k. On the other hand they divested 1.67m shares, for CA$2.8m. All up, insiders sold more shares in Africa Energy than they bought, over the last year. The chart below shows insider transactions (by companies and individuals) over the last year. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

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Insider Ownership of Africa Energy

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. Based on our data, Africa Energy insiders have about 0.9% of the stock, worth approximately CA$3.8m. But they may have an indirect interest through a corporate structure that we haven't picked up on. We prefer to see high levels of insider ownership.

So What Do The Africa Energy Insider Transactions Indicate?

It doesn't really mean much that no insider has traded Africa Energy shares in the last quarter. We don't take much encouragement from the transactions by Africa Energy insiders. We also note that, as far as we can see, insider ownership is fairly low, compared to other companies. While we like knowing what's going on with the insider's ownership and transactions, we make sure to also consider what risks are facing a stock before making any investment decision. Be aware that Africa Energy is showing 3 warning signs in our investment analysis, and 1 of those shouldn't be ignored...

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.

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