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It is not uncommon to see companies perform well in the years after insiders buy shares. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So we'll take a look at whether insiders have been buying or selling shares in Universal Stainless & Alloy Products, Inc. (NASDAQ:USAP).
What Is Insider Selling?
It's quite normal to see company insiders, such as board members, trading in company stock, from time to time. However, such insiders must disclose their trading activities, and not trade on inside information.
We don't think shareholders should simply follow insider transactions. 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'.
Universal Stainless & Alloy Products Insider Transactions Over The Last Year
The Chief Commercial Officer & Executive VP Christopher Zimmer made the biggest insider purchase in the last 12 months. That single transaction was for US$76k worth of shares at a price of US$8.49 each. That means that an insider was happy to buy shares at above the current price of US$6.62. It's very possible they regret the purchase, but it's more likely they are bullish about the company. We always take careful note of the price insiders pay when purchasing shares. Generally speaking, it catches our eye when an insider has purchased shares at above current prices, as it suggests they believed the shares were worth buying, even at a higher price. Christopher Zimmer was the only individual insider to buy shares in the last twelve months.
Christopher Zimmer bought a total of 16.60k shares over the year at an average price of US$10.18. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
Universal Stainless & Alloy Products is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Does Universal Stainless & Alloy Products Boast High Insider Ownership?
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. Our data suggests Universal Stainless & Alloy Products insiders own 3.1% of the company, worth about US$1.8m. We consider this fairly low insider ownership.
So What Do The Universal Stainless & Alloy Products Insider Transactions Indicate?
It doesn't really mean much that no insider has traded Universal Stainless & Alloy Products shares in the last quarter. On a brighter note, the transactions over the last year are encouraging. We'd like to see bigger individual holdings. However, we don't see anything to make us think Universal Stainless & Alloy Products insiders are doubting the company. 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. While conducting our analysis, we found that Universal Stainless & Alloy Products has 2 warning signs and it would be unwise to ignore these.
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, but not derivative transactions.
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. 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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