One Energy Focus Insider Raised Stake By 19% In Previous Year

Insiders were net buyers of Energy Focus, Inc.'s (NASDAQ:EFOI ) stock during the past year. That is, insiders bought more stock than they sold.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we do think it is perfectly logical to keep tabs on what insiders are doing.

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The Last 12 Months Of Insider Transactions At Energy Focus

In the last twelve months, the biggest single purchase by an insider was when CEO, President & Director Chiao Chieh Huang bought US$500k worth of shares at a price of US$1.89 per share. That implies that an insider found the current price of US$2.03 per share to be enticing. That means they have been optimistic about the company in the past, though they may have changed their mind. While we always like to see insider buying, it's less meaningful if the purchases were made at much lower prices, as the opportunity they saw may have passed. The good news for Energy Focus share holders is that an insider was buying at near the current price. Chiao Chieh Huang was the only individual insider to buy during the last year.

Chiao Chieh Huang bought a total of 478.67k shares over the year at an average price of US$1.88. You can see the insider transactions (by companies and 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!

Check out our latest analysis for Energy Focus

Energy Focus is not the only stock that insiders are buying. For those who like to find small cap companies at attractive valuations, this free list of growing companies with recent insider purchasing, could be just the ticket.

Insider Ownership

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. I reckon it's a good sign if insiders own a significant number of shares in the company. Energy Focus insiders own about US$4.5m worth of shares. That equates to 38% of the company. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.

What Might The Insider Transactions At Energy Focus Tell Us?

It doesn't really mean much that no insider has traded Energy Focus shares in the last quarter. But insiders have shown more of an appetite for the stock, over the last year. Insiders do have a stake in Energy Focus and their transactions don't cause us concern. While it's good to be aware of 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. For instance, we've identified 4 warning signs for Energy Focus (1 is a bit unpleasant) you should be aware of.

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.

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 of direct interests only, but not derivative transactions or indirect interests.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.