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Should You Be Worried About Insider Transactions At Calavo Growers, Inc. (NASDAQ:CVGW)?

Simply Wall St

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We've lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. 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 we'll take a look at whether insiders have been buying or selling shares in Calavo Growers, Inc. (NASDAQ:CVGW).

What Is Insider Buying?

It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, most countries require that the company discloses such transactions to the market.

Insider transactions are not the most important thing when it comes to long-term investing. But it is perfectly logical to keep tabs on what insiders are doing. As Peter Lynch said, 'insiders might sell their shares for any number of reasons, but they buy them for only one: they think the price will rise.'

Check out our latest analysis for Calavo Growers

Calavo Growers Insider Transactions Over The Last Year

The Chairman, Lecil Cole, made the biggest insider sale in the last 12 months. That single transaction was for US$10m worth of shares at a price of US$105 each. That means that an insider was selling shares at around the current price of US$95.81. While insider selling is a negative, to us, it is more negative if the shares are sold at a lower price. We note that this sale took place at around the current price, so it isn't a major concern, though it's hardly a good sign.

We note that in the last year insiders divested 263k shares for a total of US$26m. Insiders in Calavo Growers didn't buy any shares in the last year. You can see a visual depiction of insider transactions (by individuals) over the last 12 months, below. By clicking on the graph below, you can see the precise details of each insider transaction!

NasdaqGS:CVGW Recent Insider Trading, July 2nd 2019
NasdaqGS:CVGW Recent Insider Trading, July 2nd 2019

If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.

Insiders at Calavo Growers Have Sold Stock Recently

Over the last three months, we've seen significant insider selling at Calavo Growers. In total, insiders dumped US$11m worth of shares in that time, and we didn't record any purchases whatsoever. In light of this it's hard to argue that all the insiders think that the shares are a bargain.

Does Calavo Growers Boast High Insider Ownership?

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. Calavo Growers insiders own 6.7% of the company, currently worth about US$113m 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.

So What Do The Calavo Growers Insider Transactions Indicate?

Insiders sold stock recently, but they haven't been buying. And there weren't any purchases to give us comfort, over the last year. It is good to see high insider ownership, but the insider selling leaves us cautious. Therefore, you should should definitely take a look at this FREE report showing analyst forecasts for Calavo Growers.

But note: Calavo Growers 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 aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Thank you for reading.