Bullish Prominence Energy Ltd (ASX:PRM) insiders filled their treasuries with AU$851k worth of stock over last year

When a single insider purchases stock, it is typically not a major deal. However, when multiple insiders purchase stock, like in Prominence Energy Ltd’s (ASX:PRM) instance, it’s good news for shareholders.

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.

View our latest analysis for Prominence Energy

The Last 12 Months Of Insider Transactions At Prominence Energy

In the last twelve months, the biggest single purchase by an insider was when insider Paul Neate bought AU$186k worth of shares at a price of AU$0.017 per share. That means that even when the share price was higher than AU$0.014 (the recent price), an insider wanted to purchase shares. It’s very possible they regret the purchase, but it’s more likely they are bullish about the company. In our view, the price an insider pays for shares is very important. It is generally more encouraging if they paid above the current price, as it suggests they saw value, even at higher levels.

In the last twelve months Prominence Energy insiders were buying shares, but not selling. Their average price was about AU$0.011. To my mind it is good that insiders have invested their own money in the company. However, you should keep in mind that they bought when the share price was meaningfully below today’s levels. 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!

insider-trading-volume

Prominence 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.

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. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Our data indicates that Prominence Energy insiders own about AU$3.1m worth of shares (which is 9.6% of the company). However, it’s possible that insiders might have an indirect interest through a more complex structure. Whilst better than nothing, we’re not overly impressed by these holdings.

So What Does This Data Suggest About Prominence Energy Insiders?

There haven’t been any insider transactions in the last three months — that doesn’t mean much. However, our analysis of transactions over the last year is heartening. We’d like to see bigger individual holdings. However, we don’t see anything to make us think Prominence Energy insiders are doubting the company. 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. Be aware that Prominence Energy is showing 5 warning signs in our investment analysis, and 3 of those make us uncomfortable…

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, 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.

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