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Cavalier Resources Ltd (ASX:CVR) insiders who bought shares over the past year were rewarded handsomely last week. The stock rose 98%, resulting in a AU$4.9m rise in the company's market capitalisation, translating to a gain of 128% on their initial investment. As a result, the stock they originally bought for AU$91.0k is now worth AU$207.9k.
Although we don't think shareholders should simply follow insider transactions, we would consider it foolish to ignore insider transactions altogether.
View our latest analysis for Cavalier Resources
The Last 12 Months Of Insider Transactions At Cavalier Resources
In fact, the recent purchase by Kerry Parsons was the biggest purchase of Cavalier Resources shares made by an insider individual in the last twelve months, according to our records. Even though the purchase was made at a significantly lower price than the recent price (AU$0.17), we still think insider buying is a positive. 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.
Cavalier Resources insiders may have bought shares in the last year, but they didn't sell any. 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!
There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of undervalued small cap companies that insiders are buying.
Insiders At Cavalier Resources Have Bought Stock Recently
Over the last quarter, Cavalier Resources insiders have spent a meaningful amount on shares. Specifically, insider Kerry Parsons bought AU$83k worth of shares in that time, and we didn't record any sales whatsoever. That shows some optimism about the company's future.
Insider Ownership
Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. 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 Cavalier Resources insiders own 26% of the company, worth about AU$2.6m. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.
So What Does This Data Suggest About Cavalier Resources Insiders?
It is good to see the recent insider purchase. And the longer term insider transactions also give us confidence. However, we note that the company didn't make a profit over the last twelve months, which makes us cautious. Insiders likely see value in Cavalier Resources shares, given these transactions (along with notable insider ownership of 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. You'd be interested to know, that we found 4 warning signs for Cavalier Resources and we suggest you have a look.