It is not uncommon to see companies perform well in the years after insiders buy shares. On the other hand, we’d be remiss not to mention that insider sales have been known to precede tough periods for a business. So we’ll take a look at whether insiders have been buying or selling shares in Northwest Pipe Company (NASDAQ:NWPX).
Do Insider Transactions Matter?
Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock in the company. 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 it is perfectly logical to keep tabs on what insiders are doing. For example, a Columbia 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 Northwest Pipe
Over the last year, we can see that the biggest insider sale was by the insider, Michelle Applebaum, for US$106k worth of shares, at about US$25.58 per share. So it’s clear an insider wanted to take some cash off the table, even below the current price of US$33.69. When an insider sells below the current price, it suggests that they considered that lower price to be fair. That makes us wonder what they think of the (higher) recent valuation. However, while insider selling is sometimes discouraging, it’s only a weak signal. We note that the biggest single sale was only 18% of Michelle Applebaum’s holding. The only individual insider seller over the last year was Michelle Applebaum.
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!
If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.
Insider Ownership of Northwest Pipe
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. 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 indicates that Northwest Pipe insiders own about US$9.6m worth of shares (which is 2.9% of the company). Overall, this level of ownership isn’t that impressive, but it’s certainly better than nothing!
What Might The Insider Transactions At Northwest Pipe Tell Us?
It doesn’t really mean much that no insider has traded Northwest Pipe shares in the last quarter. Our analysis of Northwest Pipe insider transactions leaves us unenthusiastic. And usually insiders own more stock in the company, according to our data. In addition to knowing about insider transactions going on, it’s beneficial to identify the risks facing Northwest Pipe. Case in point: We’ve spotted 1 warning sign for Northwest Pipe you should be aware of.
Of course Northwest Pipe 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.
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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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