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Trade Alert: The Independent Lead Director Of Compass Diversified (NYSE:CODI), D. Ewing, Has Just Spent US$69k Buying 3.0% More Shares

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·2 min read
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Whilst it may not be a huge deal, we thought it was good to see that the Compass Diversified (NYSE:CODI) Independent Lead Director, D. Ewing, recently bought US$69k worth of stock, for US$27.50 per share. However, it only increased their shares held by 3.0%, and it wasn't a huge purchase by absolute value, either.

View our latest analysis for Compass Diversified

The Last 12 Months Of Insider Transactions At Compass Diversified

The Independent Chairman of the Board C. Day made the biggest insider purchase in the last 12 months. That single transaction was for US$120k worth of shares at a price of US$19.61 each. Even though the purchase was made at a significantly lower price than the recent price (US$27.69), we still think insider buying is a positive. While it does suggest insiders consider the stock undervalued at lower prices, this transaction doesn't tell us much about what they think of current prices.

While Compass Diversified insiders bought shares during the last year, they didn't sell. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

insider-trading-volume
insider-trading-volume

Compass Diversified is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.

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. Compass Diversified insiders own about US$47m worth of shares. That equates to 2.6% of the company. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.

What Might The Insider Transactions At Compass Diversified Tell Us?

The recent insider purchase is heartening. And an analysis of the transactions over the last year also gives us confidence. But on the other hand, the company made a loss during the last year, which makes us a little cautious. When combined with notable insider ownership, these factors suggest Compass Diversified insiders are well aligned, and that they may think the share price is too low. So while it's helpful to know what insiders are doing in terms of buying or selling, it's also helpful to know the risks that a particular company is facing. Be aware that Compass Diversified is showing 2 warning signs in our investment analysis, and 1 of those makes us a bit uncomfortable...

Of course Compass Diversified may not be the best stock to buy. So you may wish to see this free collection of high quality companies.

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. 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.