Insiders Buying Cauldron Energy Might Wish They Invested More, Stock Gains 13%

Insiders who bought Cauldron Energy Limited (ASX:CXU) stock in the last 12 months were richly rewarded last week. The company's market value increased by AU$6.0m as a result of the stock's 13% gain over the same period. As a result, their original purchase of AU$258.4k worth of stock is now worth AU$1.03m.

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.

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The Last 12 Months Of Insider Transactions At Cauldron Energy

Over the last year, we can see that the biggest insider purchase was by Non-Executive Director Derong Qiu for AU$213k worth of shares, at about AU$0.006 per share. Although we like to see insider buying, we note that this large purchase was at significantly below the recent price of AU$0.026. 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.

In the last twelve months Cauldron Energy insiders were buying shares, but not selling. The chart below shows insider transactions (by companies and individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!

View our latest analysis for Cauldron Energy

Cauldron Energy is not the only stock insiders are buying. So take a peek at this free list of under-the-radar companies with insider buying.

Cauldron Energy Insiders Bought Stock Recently

Over the last three months, we've seen a bit of insider buying at Cauldron Energy. Non-Executive Director Michael Wells purchased AU$26k worth of shares in that period. It's good to see the insider buying, as well as the lack of recent sellers. But in this case the amount purchased means the recent transaction may not be very meaningful on its own.

Insider Ownership Of Cauldron Energy

Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. It appears that Cauldron Energy insiders own 18% of the company, worth about AU$9.2m. While this is a strong but not outstanding level of insider ownership, it's enough to indicate some alignment between management and smaller shareholders.

What Might The Insider Transactions At Cauldron Energy Tell Us?

Our data shows a little insider buying, but no selling, in the last three months. Overall the buying isn't worth writing home about. But insiders have shown more of an appetite for the stock, over the last year. Overall we don't see anything to make us think Cauldron Energy insiders are doubting the company, and they do own shares. 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. Our analysis shows 6 warning signs for Cauldron Energy (5 can't be ignored!) and we strongly recommend you look at these before investing.

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 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.