It is usually uneventful when a single insider buys stock. However, When quite a few insiders buy shares, as it happened in Earth Alive Clean Technologies Inc.'s (CVE:EAC) case, it's fantastic news for shareholders.
Although we don't think shareholders should simply follow insider transactions, we would consider it foolish to ignore insider transactions altogether.
Check out our latest analysis for Earth Alive Clean Technologies
Earth Alive Clean Technologies Insider Transactions Over The Last Year
The President Nikolaos Sofronis made the biggest insider purchase in the last 12 months. That single transaction was for CA$400k worth of shares at a price of CA$0.02 each. That means that an insider was happy to buy shares at above the current price of CA$0.015. While their view may have changed since the purchase was made, this does at least suggest they have had confidence in the company's future. In our view, the price an insider pays for shares is very important. 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.
Earth Alive Clean Technologies 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 click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
Earth Alive Clean Technologies 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 Of Earth Alive Clean Technologies
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 Earth Alive Clean Technologies insiders own 25% of the company, worth about CA$2.0m. 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 Earth Alive Clean Technologies Insider Transactions Indicate?
The fact that there have been no Earth Alive Clean Technologies insider transactions recently certainly doesn't bother us. However, our analysis of transactions over the last year is heartening. Insiders own shares in Earth Alive Clean Technologies and we see no evidence to suggest they are worried about the future. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. Be aware that Earth Alive Clean Technologies is showing 5 warning signs in our investment analysis, and 4 of those are a bit concerning...