At the end of last year, one of the directors of one of the best Canadian large cap energy infrastructure (pipelines) companies out there, Enbridge Inc. (TSX:ENB)(NYSE:ENB), purchased 10,000 shares at total cost of almost $401,000.
This move indicates real enthusiasm about where Enbridge’s share price is relative to what it’s intrinsically worth, at least to this insider. Following what insiders decide to do with respect to the stocks they own can be instructional, particularly when such transactions involve the large purchase of one particular company.
Insider buying activity, and in particular large insider share purchases, tend to indicate that there’s some sort of unlocked value waiting to be appreciated by financial markets. The stock market tends to overreact, both on the upside and downside, and insiders often try to time the market when the stock of the company they manage trades outside of what they might think is a reasonable range.
As always, please remember to consult with a certified financial advisor into your own homework before making investing decisions. Insider buying and selling activity is not necessarily indicative of the future performance of a given company’s stock price, and insiders regularly buy or sell positions in companies they own or manage for reasons other than expectations of future stock price performance.
Analyzing insider transactions in a given stock is one tool of many to gain pertinent information to assist in investment decision making.
Invest wisely, my friends.