Generally, when a single insider buys stock, it is usually not a big deal. However, when several insiders are buying, like in the case of Lakes Blue Energy NL (ASX:LKO), it sends a favourable message to the company’s shareholders.
While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, logic dictates you should pay some attention to whether insiders are buying or selling shares.
This technology could replace computers: discover the 20 stocks are working to make quantum computing a reality.
Notably, that recent purchase by Roland Sleeman is the biggest insider purchase of Lakes Blue Energy shares that we’ve seen in the last year. Although we like to see insider buying, we note that this large purchase was at significantly below the recent price of AU$1.13. Because the shares were purchased at a lower price, this particular buy doesn’t tell us much about how insiders feel about the current share price.
Lakes Blue 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!
Check out our latest analysis for Lakes Blue Energy
Lakes Blue 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.
Over the last three months, we’ve seen significant insider buying at Lakes Blue Energy. Not only was there no selling that we can see, but they collectively bought AU$636k worth of shares. That shows some optimism about the company’s future.
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. A high insider ownership often makes company leadership more mindful of shareholder interests. Our data indicates that Lakes Blue Energy insiders own about AU$7.6m worth of shares (which is 9.9% of the company). We do note, however, it is possible insiders have an indirect interest through a private company or other corporate structure. Overall, this level of ownership isn’t that impressive, but it’s certainly better than nothing!
It’s certainly positive to see the recent insider purchases. 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. While the overall levels of insider ownership are below what we’d like to see, the history of transactions imply that Lakes Blue Energy insiders are reasonably well aligned, and optimistic for the future. In addition to knowing about insider transactions going on, it’s beneficial to identify the risks facing Lakes Blue Energy. Be aware that Lakes Blue Energy is showing 5 warning signs in our investment analysis, and 3 of those don’t sit too well with us…