We often see insiders buying up shares in companies that perform well over the long term. The flip side of that is that there are more than a few examples of insiders dumping stock prior to a period of weak performance. So we’ll take a look at whether insiders have been buying or selling shares in Baytex Energy Corp. (TSE:BTE).
What Is Insider Buying?
Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock on the market. However, such insiders must disclose their trading activities, and not trade on inside information.
We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. But logic dictates you should pay some attention to whether insiders are buying or selling shares. 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.’
Baytex Energy Insider Transactions Over The Last Year
In the last twelve months, the biggest single purchase by an insider was when Independent Director Mark Bly bought CA$405k worth of shares at a price of CA$4.50 per share. That means that even when the share price was higher, an insider wanted to purchase shares. Their view may have changed since then, but at least it shows they felt optimistic at the time. It’s not at all bad to see insiders buy shares at or above current prices.
Over the last year, we can see that insiders have bought 452.68k shares worth CA$1.4m. On the other hand they divested 350.00k shares, for CA$1.3m. In the last twelve months there was more buying than selling by Baytex Energy insiders. The average buy price was around CA$3.14. I’d consider this a positive as it suggests insiders see value at around the current price, which is CA$2.43. The chart below shows insider transactions over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
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Insiders at Baytex Energy Have Bought Stock Recently
There has been significantly more insider buying, than selling, at Baytex Energy, over the last three months. In total, 4 insiders bought CA$562k worth of shares in that time. But we did see insider selling worth CA$439k. The buying outweighs the selling, which suggests that insiders may believe the company will do well in the future.
Insider Ownership of Baytex Energy
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. 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’s great to see that Baytex Energy insiders own 3.5% of the company, worth about CA$48m. Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.
So What Do The Baytex Energy Insider Transactions Indicate?
It is good to see recent purchasing. 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 Baytex Energy shares, given these transactions (along with notable insider ownership of the company). Therefore, you should should definitely take a look at this FREE report showing analyst forecasts for Baytex Energy.
If you would prefer to check out another company — one with potentially superior financials — then do not miss this free list of interesting companies, that have HIGH return on equity and low debt.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at firstname.lastname@example.org.