We’ve lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So before you buy or sell Kraton Corporation (NYSE:KRA), 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, 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 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 Kraton
Senior VP & President of Polymer Segment Holger Jung made the biggest insider sale in the last 12 months. That single transaction was for US$511k worth of shares at a price of US$49.59 each. Although we don’t gain confidence from insider selling, we note that this large sale was at well above current price of US$22.14. So it may not tell us anything about how insiders feel about the current share price.
In total, Kraton insiders sold more than they bought over the last year. The average sell price was around US$49.54. Insider selling doesn’t make us excited to buy. But the selling was at much higher prices than the current share price (US$22.14), so it probably doesn’t tell us a lot about the value on offer today. The chart below shows insider transactions over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!
If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).
Insiders at Kraton Have Bought Stock Recently
Over the last quarter, Kraton insiders have spent a meaningful amount on shares. Vijay Mhetar spent US$185k on stock, and there wasn’t any selling. That shows some optimism about the company’s future.
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. A high insider ownership often makes company leadership more mindful of shareholder interests. Kraton insiders own 2.3% of the company, currently worth about US$16m based on the recent share price. 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 Kraton 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 Kraton 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.
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.
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 firstname.lastname@example.org.