Compass Diversified (NYSE:CODI) is up 6.6%, but insiders still continue to see a loss of US$273k on their US$1.9m investment
Insiders who purchased US$1.9m worth of Compass Diversified (NYSE:CODI) shares over the past year recouped some of their losses after price gained 6.6% last week. The purchase, however, has proven to be a pricey bet, with losses currently totalling US$273k.
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 Compass Diversified
Compass Diversified Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider purchase was by Independent Director Gordon Burns for US$769k worth of shares, at about US$27.47 per share. That means that an insider was happy to buy shares at above the current price of US$24.13. It's very possible they regret the purchase, but it's more likely they are bullish about the company. In our view, the price an insider pays for shares is very important. Generally speaking, it catches our eye when insiders have purchased shares at above current prices, as it suggests they believed the shares were worth buying, even at a higher price.
In the last twelve months Compass Diversified insiders were buying shares, but not selling. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of growing companies that insiders are buying.
Does Compass Diversified 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. Compass Diversified insiders own about US$40m worth of shares. That equates to 2.4% 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 Compass Diversified Insider Transactions Indicate?
It doesn't really mean much that no insider has traded Compass Diversified shares in the last quarter. On a brighter note, the transactions over the last year are encouraging. Insiders do have a stake in Compass Diversified and their transactions don't cause us concern. While we like knowing what's going on with the insider's ownership and transactions, we make sure to also consider what risks are facing a stock before making any investment decision. For example, Compass Diversified has 2 warning signs (and 1 which makes us a bit uncomfortable) we think you should know about.
But note: Compass Diversified 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.
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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.
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