As Cauldron Energy Limited (ASX:CXU) hits AU$7.5m market cap, insiders may be dismayed about not purchasing higher quantities
Cauldron Energy Limited (ASX:CXU) insiders who bought shares over the past year were rewarded handsomely last week. The stock rose 14%, resulting in a AU$932k rise in the company's market capitalisation. Put another way, the original AU$344k acquisition is now worth AU$383k.
Although we don't think shareholders should simply follow insider transactions, logic dictates you should pay some attention to whether insiders are buying or selling shares.
See our latest analysis for Cauldron Energy
Cauldron Energy Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider purchase was by insider Mark Bahen for AU$328k worth of shares, at about AU$0.007 per share. Although we like to see insider buying, we note that this large purchase was at significantly below the recent price of AU$0.008. Because it occurred at a lower valuation, it doesn't tell us much about whether insiders might find today's price attractive.
Cauldron Energy insiders may have bought shares in the last year, but they didn't sell any. 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!
Cauldron Energy is not the only stock that insiders are buying. For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.
Insiders At Cauldron Energy Have Bought Stock Recently
It's good to see that Cauldron Energy insiders have made notable investments in the company's shares. We can see that insider Mark Bahen paid AU$328k for shares in the company. No-one sold. This could be interpreted as suggesting a positive outlook.
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. It appears that Cauldron Energy insiders own 25% of the company, worth about AU$1.8m. While this is a strong but not outstanding level of insider ownership, it's enough to indicate some alignment between management and smaller shareholders.
So What Do The Cauldron Energy Insider Transactions Indicate?
The recent insider purchase is heartening. And an analysis of the transactions over the last year also gives us confidence. But we don't feel the same about the fact the company is making losses. When combined with notable insider ownership, these factors suggest Cauldron Energy insiders are well aligned, and that they may think the share price is too low. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. Every company has risks, and we've spotted 4 warning signs for Cauldron Energy you should know about.
Of course Cauldron Energy may not be the best stock to buy. So you may wish to see this free collection of high quality 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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.
Join A Paid User Research Session
You’ll receive a US$30 Amazon Gift card for 1 hour of your time while helping us build better investing tools for the individual investors like yourself. Sign up here
