Investors who are interested in State Gas Limited (ASX:GAS) should definitely note that Non-Executive Director Philip St Baker recently paid AU$0.05 per share to buy AU$284,000 worth of shares. This certainly makes us expect the best, especially as they increased their own stake by 50% in the process, potentially indicating genuine optimism.
Check out our latest analysis for State Gas
Insider transactions in the state-owned gas sector last year
Notably, this recent purchase by non-executive director Philip St Baker was not the only time they have bought State Gas shares this year. Earlier this year, they paid AU$0.15 per share in a purchase valued at AU$350k. So it’s clear that an insider wanted to buy, even at a higher price than the current share price (AU$0.045). Their opinion may have changed since then, but it at least shows that they were optimistic at the time. It is very important for us to consider the price that insiders pay for shares. As a general rule, we are more positive on a stock when insiders have bought shares at a higher price than the current price, because it suggests that they considered the stock worthwhile even at a higher price.
State Gas insiders may have bought shares in the last year, but they haven’t sold any. They paid about AU$0.099 on average. These transactions suggest that insiders found the current price attractive. Below is a visual representation of insider transactions (by companies and individuals) over the last 12 months. By clicking on the graph below you can see the exact details of each insider transaction!
State Gas isn’t the only stock insiders are buying, so take a look at these free List of companies with insider purchases that remain under the radar.
Insider ownership
Many investors like to check how much of a company is owned by insiders. Typically, the higher the insider ownership, the more likely it is that insiders are motivated to build the company for the long term. State Gas insiders own about AU$3.1m worth of shares, representing 21% of the company. This level of insider ownership is good, but not particularly remarkable. It certainly suggests a reasonable level of alignment.
What could State Gas’ insider transactions tell us?
It’s good that there has been some buying recently. And we are also confident about the insider transactions over the long term. But we are not so happy about the fact that the company is making losses. Since insiders also own a significant share of State Gas, we believe they are quite confident about a bright future. In addition to knowing about ongoing insider transactions, it is useful to identify the risks that State Gas faces. For example, State Gas has 4 warning signs (and 3 that are concerning) that we think you should know about.
Naturally State Gas may not be the best stock to buy. You may want 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 regulator. Currently, we only consider open market transactions and private disposals of direct holdings, but not derivative transactions or indirect holdings.
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This Simply Wall St article is of a general nature. We comment solely on the basis of historical data and analyst forecasts, using an unbiased methodology. Our articles do not constitute financial advice. It is not a recommendation to buy or sell any stock and does not take into account your objectives or financial situation. Our goal is to provide you with long-term analysis based on fundamental data. Note that our analysis may not take into account the latest price-sensitive company announcements or qualitative materials. Simply Wall St does not hold any of the stocks mentioned.
