The recent 10.0% drop in Tlou Energy Limited's (ASX:TOU) stock could come as a blow to insiders who purchased AU$1.10m worth of stock at an average buy price of AU$0.035 over the past 12 months. Insiders invest with the hopes of seeing their money grow in value over time. However, as a result of recent losses, their initial investment is now only worth AU$850.2k, which is not what they expected.

Although we don't think shareholders should simply follow insider transactions, we do think it is perfectly logical to keep tabs on what insiders are doing.

View our latest analysis for Tlou Energy

Tlou Energy Insider Transactions Over The Last Year

Over the last year, we can see that the biggest insider purchase was by CEO, MD & Director Anthony Gilby for AU$560k worth of shares, at about AU$0.035 per share. That means that an insider was happy to buy shares at above the current price of AU$0.027. Their view may have changed since then, but at least it shows they felt optimistic at the time. To us, it's very important to consider the price insiders pay for shares. As a general rule, we feel more positive about a stock if insiders have bought shares at above current prices, because that suggests they viewed the stock as good value, even at a higher price.

Tlou Energy insiders may have bought shares in the last year, but they didn't sell any. 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!

There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of undervalued small cap companies that insiders are buying.

Tlou Energy Insiders Bought Stock Recently

Over the last quarter, Tlou Energy insiders have spent a meaningful amount on shares. Overall, three insiders shelled out AU$429k for shares in the company -- and none sold. This makes one think the business has some good points.

Insider Ownership Of Tlou Energy

Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Tlou Energy insiders own about AU$11m worth of shares. That equates to 37% of the company. We've certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.

So What Do The Tlou Energy Insider Transactions Indicate?

It is good to see recent purchasing. 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. Given that insiders also own a fair bit of Tlou Energy we think they are probably pretty confident of a bright future. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Tlou Energy. For instance, we've identified 3 warning signs for Tlou Energy (1 is potentially serious) you should be aware of.

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.

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 of direct interests only, but not derivative transactions or indirect interests.

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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.