Usually, when one insider buys stock, it might not be a monumental event. But when multiple insiders are buying like they did in the case of Enerflex Ltd. (TSE:EFX), that sends out a positive message to the company's shareholders.
While insider transactions are not the most important thing when it comes to long-term investing, we would consider it foolish to ignore insider transactions altogether.
Enerflex Insider Transactions Over The Last Year
In the last twelve months, the biggest single purchase by an insider was when Independent Director Kevin Reinhart bought CA$100k worth of shares at a price of CA$5.00 per share. Although we like to see insider buying, we note that this large purchase was at significantly below the recent price of CA$8.75. Because it occurred at a lower valuation, it doesn't tell us much about whether insiders might find today's price attractive.
While Enerflex insiders bought shares during the last year, they didn't sell. The average buy price was around CA$5.55. 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 the insider transactions (by companies and individuals) over the last year depicted in the chart below. 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 growing companies that insiders are buying.
Many investors like to check how much of a company is owned by 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 suggests Enerflex insiders own 0.7% of the company, worth about CA$4.9m. We consider this fairly low insider ownership.
So What Does This Data Suggest About Enerflex Insiders?
There haven't been any insider transactions in the last three months -- that doesn't mean much. On a brighter note, the transactions over the last year are encouraging. We'd like to see bigger individual holdings. However, we don't see anything to make us think Enerflex 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. Case in point: We've spotted 1 warning sign for Enerflex you should be aware of.
But note: Enerflex may not be the best stock to buy. So take a peek at this free list of interesting companies with high ROE 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.
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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.