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Have Insiders Been Buying Cathedral Energy Services Ltd. (TSE:CET) Shares This Year?

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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 before you buy or sell Cathedral Energy Services Ltd. (TSE:CET), you may well want to know whether insiders have been buying or selling.

What Is Insider Selling?

Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock in the company. However, rules govern insider transactions, and certain disclosures are required.

We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. But equally, we would consider it foolish to ignore insider transactions altogether. 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 Cathedral Energy Services

Cathedral Energy Services Insider Transactions Over The Last Year

The Independent Chairman Roderick Maxwell made the biggest insider purchase in the last 12 months. That single transaction was for CA$400k worth of shares at a price of CA$0.25 each. Although we like to see insider buying, we note that this large purchase was at significantly below the recent price of CA$0.48. 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 insiders purchased 3.09m shares for CA$773k. But they sold 15.00k shares for CA$2.4k. In total, Cathedral Energy Services insiders bought more than they sold over the last year. 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!

insider-trading-volume
insider-trading-volume

There are always plenty of stocks that insiders are buying. So if that suits your style you could check each stock one by one or you could take a look at this free list of companies. (Hint: insiders have been buying them).

Cathedral Energy Services Insiders Bought Stock Recently

It's good to see that Cathedral Energy Services insiders have made notable investments in the company's shares. Overall, five insiders shelled out CA$730k for shares in the company -- and none sold. This is a positive in our book as it implies some confidence.

Does Cathedral Energy Services Boast High Insider Ownership?

For a common shareholder, it is worth checking how many shares are held by company insiders. I reckon it's a good sign if insiders own a significant number of shares in the company. It appears that Cathedral Energy Services insiders own 25% of the company, worth about CA$6.8m. 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 Cathedral Energy Services Insiders?

It is good to see recent purchasing. And an analysis of the transactions over the last year also gives us confidence. But we don't feel the same about the fact the company is making losses. When combined with notable insider ownership, these factors suggest Cathedral Energy Services insiders are well aligned, and that they may think the share price is too low. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Cathedral Energy Services. When we did our research, we found 4 warning signs for Cathedral Energy Services (1 shouldn't be ignored!) that we believe deserve your full attention.

But note: Cathedral Energy Services 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. 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.

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