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Are Insiders Buying Vulcan Energy Resources Limited (ASX:VUL) Stock?

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Simply Wall St
·4 min read
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It is not uncommon to see companies perform well in the years after insiders buy shares. On the other hand, we'd be remiss not to mention that insider sales have been known to precede tough periods for a business. So before you buy or sell Vulcan Energy Resources Limited (ASX:VUL), you may well want to know whether insiders have been buying or selling.

Do Insider Transactions Matter?

It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, most countries require that the company discloses such transactions to the market.

We don't think shareholders should simply follow insider transactions. But it is perfectly logical to keep tabs on what insiders are doing. As Peter Lynch said, 'insiders might sell their shares for any number of reasons, but they buy them for only one: they think the price will rise'.

View our latest analysis for Vulcan Energy Resources

The Last 12 Months Of Insider Transactions At Vulcan Energy Resources

In the last twelve months, the biggest single purchase by an insider was when insider John Hancock bought AU$4.3m worth of shares at a price of AU$0.84 per share. We do like to see buying, but this purchase was made at well below the current price of AU$7.22. 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.

The chart below shows insider transactions (by companies and individuals) over the last year. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

insider-trading-volume
insider-trading-volume

Vulcan Energy Resources 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.

Insiders at Vulcan Energy Resources Have Bought Stock Recently

Over the last three months, we've seen significantly more insider buying, than insider selling, at Vulcan Energy Resources. In total, insider John Hancock bought AU$4.3m worth of shares in that time. On the other hand, insider John Hancock netted AU$930k by selling. The buying outweighs the selling, which suggests that insiders may believe the company will do well in the future.

Insider Ownership

Many investors like to check how much of a company is owned by insiders. We usually like to see fairly high levels of insider ownership. It's great to see that Vulcan Energy Resources insiders own 24% of the company, worth about AU$203m. I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.

What Might The Insider Transactions At Vulcan Energy Resources Tell Us?

The recent insider purchase is heartening. And the longer term insider transactions also give us confidence. But on the other hand, the company made a loss during the last year, which makes us a little cautious. Along with the high insider ownership, this analysis suggests that insiders are quite bullish about Vulcan Energy Resources. Nice! While we like knowing what's going on with the insider's ownership and transactions, we make sure to also consider what risks are facing a stock before making any investment decision. Every company has risks, and we've spotted 2 warning signs for Vulcan Energy Resources (of which 1 is a bit concerning!) you should know about.

Of course Vulcan Energy Resources may not be the best stock to buy. So you may wish to see this free collection of high quality companies.

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. 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.