When a single insider purchases stock, it is typically not a major deal. However, when multiple insiders purchase stock, like in Kinetiko Energy Limited’s (ASX:KKO) instance, it’s good news for shareholders.
While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we would consider it foolish to ignore insider transactions altogether.
Check out our latest analysis for Kinetiko Energy
In the last twelve months, the biggest single purchase by an insider was when Non-Executive Director Donald Mzolisa Ncube bought AU$231k worth of shares at a price of AU$0.06 per share. We do like to see buying, but this purchase was made at well below the current price of AU$0.068. While it does suggest insiders consider the stock undervalued at lower prices, this transaction doesn’t tell us much about what they think of current prices.
While Kinetiko Energy insiders bought shares during the last year, they didn’t sell. 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!
Kinetiko Energy 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.
We saw some Kinetiko Energy insider buying shares in the last three months. Non-Executive Director Robert Scharnell bought AU$11k worth of shares in that time. We like it when there are only buyers, and no sellers. However, in this case the amount invested recently is quite small.
Many investors like to check how much of a company is owned by insiders. I reckon it’s a good sign if insiders own a significant number of shares in the company. Kinetiko Energy insiders own about AU$52m worth of shares (which is 53% of the company). I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.
Our data shows a little insider buying, but no selling, in the last three months. That said, the purchases were not large. But insiders have shown more of an appetite for the stock, over the last year. It would be great to see more insider buying, but overall it seems like Kinetiko Energy insiders are reasonably well aligned (owning significant chunk of the company’s shares) and optimistic for the future. So these insider transactions can help us build a thesis about the stock, but it’s also worthwhile knowing the risks facing this company. For example, Kinetiko Energy has 5 warning signs (and 2 which are significant) we think you should know about.
