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 Insteel Industries, Inc. (NASDAQ:IIIN), you may well want to know whether insiders have been buying or selling.
Do Insider Transactions Matter?
It’s quite normal to see company insiders, such as board members, trading in company stock, from time to time. However, most countries require that the company discloses such transactions to the market.
We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. But equally, we would consider it foolish to ignore insider transactions altogether. For example, a Colombia University study found that ‘insiders are more likely to engage in open market purchases of their own company’s stock when the firm is about to reveal new agreements with customers and suppliers’.
The Last 12 Months Of Insider Transactions At Insteel Industries
Over the last year, we can see that the biggest insider sale was by VP, CFO & Treasurer Michael Gazmarian for US$1.4m worth of shares, at about US$40.24 per share. Although we don’t gain confidence from insider selling, we note that this large sale was at well above current price of US$25.40. So it is hard to draw any strong conclusion from it.
Over the last year we saw more insider selling of Insteel Industries shares, than buying. The sellers received a price of around US$40.20, on average. We are not joyful about insider selling. However, we do note that the average sale price was significantly higher than the current share price (which is US$25.40). The chart below shows insider transactions over the last year. 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.
Insteel Industries Insiders Bought Stock Recently
Over the last quarter, Insteel Industries insiders have spent a meaningful amount on shares. Jon Ruth spent US$104k on stock, and there wasn’t any selling. This makes one think the business has some good points.
I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with insiders. We usually like to see fairly high levels of insider ownership. Insteel Industries insiders own about US$20m worth of shares (which is 4.2% of the company). This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.
What Might The Insider Transactions At Insteel Industries Tell Us?
It is good to see recent insider purchase. On the other hand the transaction history, over the last year, isn’t so positive. We don’t take much heart from transactions by Insteel Industries insiders over the last year. But they own a reasonable amount of the company, and there was some buying recently. Overall they seem reasonably aligned. If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its future.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at email@example.com.