Cavalier Resources Ltd (ASX:CVR) insiders who bought shares over the past year were rewarded handsomely last week. The stock rose 98%, resulting in a AU$4.9m rise in the company's market capitalisation, translating to a gain of 128% on their initial investment. As a result, the stock they originally bought for AU$91.0k is now worth AU$207.9k.

Although we don't think shareholders should simply follow insider transactions, we would consider it foolish to ignore insider transactions altogether.

View our latest analysis for Cavalier Resources

The Last 12 Months Of Insider Transactions At Cavalier Resources

In fact, the recent purchase by Kerry Parsons was the biggest purchase of Cavalier Resources shares made by an insider individual in the last twelve months, according to our records. Even though the purchase was made at a significantly lower price than the recent price (AU$0.17), we still think insider buying is a positive. 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.

Cavalier Resources 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. By clicking on the graph below, you can see the precise details of each insider transaction!

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.

Insiders At Cavalier Resources Have Bought Stock Recently

Over the last quarter, Cavalier Resources insiders have spent a meaningful amount on shares. Specifically, insider Kerry Parsons bought AU$83k worth of shares in that time, and we didn't record any sales whatsoever. That shows some optimism about the company's future.

Insider Ownership

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. It appears that Cavalier Resources insiders own 26% of the company, worth about AU$2.6m. 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 Cavalier Resources Insiders?

It is good to see the recent insider purchase. 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 Cavalier Resources shares, given these transactions (along with notable insider ownership of the company). So while it's helpful to know what insiders are doing in terms of buying or selling, it's also helpful to know the risks that a particular company is facing. You'd be interested to know, that we found 4 warning signs for Cavalier Resources and we suggest you have a look.

But note: Cavalier Resources 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 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.