Multiple insiders secured a larger position in ENRG Elements Limited (ASX:EEL) shares over the last 12 months. This is reassuring as this suggests that insiders have increased optimism about the company’s prospects.
Although we don’t think shareholders should simply follow insider transactions, we would consider it foolish to ignore insider transactions altogether.
The Non-Executive Chairman Jiandong He made the biggest insider purchase in the last 12 months. That single transaction was for AU$979k worth of shares at a price of AU$0.002 each. That means that an insider was happy to buy shares at above the current price of AU$0.0015. Their view may have changed since then, but at least it shows they felt optimistic at the time. To us, it’s very important to consider the price insiders pay for shares. As a general rule, we feel more positive about a stock if insiders have bought shares at above current prices, because that suggests they viewed the stock as good value, even at a higher price.
In the last twelve months insiders purchased 810.79m shares for AU$1.3m. But insiders sold 140.00m shares worth AU$280k. In total, ENRG Elements insiders bought more than they sold over the last year. Their average price was about AU$0.0016. I’d consider this a positive as it suggests insiders see value at around the current price. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. By clicking on the graph below, you can see the precise details of each insider transaction!
View our latest analysis for ENRG Elements
ENRG Elements 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.
Many investors like to check how much of a company is owned by insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. It appears that ENRG Elements insiders own 36% of the company, worth about AU$2.6m. While this is a strong but not outstanding level of insider ownership, it’s enough to indicate some alignment between management and smaller shareholders.
The fact that there have been no ENRG Elements insider transactions recently certainly doesn’t bother us. However, our analysis of transactions over the last year is heartening. Insiders own shares in ENRG Elements and we see no evidence to suggest they are worried about the future. 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. For example – ENRG Elements has 5 warning signs we think 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.