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Quite a few insiders have dramatically grown their holdings in International Petroleum Corporation (TSE:IPCO) over the past 12 months. An insider's optimism about the company's prospects is a positive sign.
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.
See our latest analysis for International Petroleum
The Last 12 Months Of Insider Transactions At International Petroleum
In the last twelve months, the biggest single purchase by an insider was when Chief Financial Officer Christophe Nerguararian bought CA$2.0m worth of shares at a price of CA$14.93 per share. Even though the purchase was made at a significantly lower price than the recent price (CA$19.43), we still think insider buying is a positive. 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 International Petroleum insiders were buying shares, but not selling. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
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.
Insider Ownership Of International Petroleum
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. We usually like to see fairly high levels of insider ownership. It appears that International Petroleum insiders own 3.5% of the company, worth about CA$83m. 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 Do The International Petroleum Insider Transactions Indicate?
It doesn't really mean much that no insider has traded International Petroleum shares in the last quarter. On a brighter note, the transactions over the last year are encouraging. Insiders own shares in International Petroleum and we see no evidence to suggest they are worried about the future. 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. For example - International Petroleum has 2 warning signs we think you should be aware of.