It is not uncommon to see companies perform well in the years after insiders buy shares. The flip side of that is that there are more than a few examples of insiders dumping stock prior to a period of weak performance. So before you buy or sell AdvanSix Inc. (NYSE:ASIX), you may well want to know whether insiders have been buying or selling.
What Is Insider Buying?
Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock in the company. However, rules govern insider transactions, and certain disclosures are required.
Insider transactions are not the most important thing when it comes to long-term investing. But logic dictates you should pay some attention to whether insiders are buying or selling shares. For example, a Harvard University study found that 'insider purchases earn abnormal returns of more than 6% per year.
The Last 12 Months Of Insider Transactions At AdvanSix
Independent Director Daniel Sansone made the biggest insider purchase in the last 12 months. That single transaction was for US$109k worth of shares at a price of US$27.37 each. That means that an insider was happy to buy shares at above the current price of US$20.31. 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.
While AdvanSix insiders bought shares last year, they didn't sell. They paid about US$22.75 on average. These transactions suggest that insiders have considered the current price attractive. You can see the insider transactions (by 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!
AdvanSix is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Insiders at AdvanSix Have Bought Stock Recently
It's good to see that AdvanSix insiders have made notable investments in the company's shares. Overall, two insiders shelled out US$202k for shares in the company -- and none sold. This could be interpreted as suggesting a positive outlook.
Insider Ownership of AdvanSix
Many investors like to check how much of a company is owned by insiders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Insiders own 1.8% of AdvanSix shares, worth about US$9.7m, according to our data. Whilst better than nothing, we're not overly impressed by these holdings.
So What Does This Data Suggest About AdvanSix Insiders?
It's certainly positive to see the recent insider purchases. And an analysis of the transactions over the last year also gives us confidence. On this analysis the only slight negative we see is the fairly low (overall) insider ownership; their transactions suggest that they are quite positive on AdvanSix stock. Of course, the future is what matters most. So if you are interested in AdvanSix, you should check out this free report on analyst forecasts for the company.
But note: AdvanSix 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.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
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