Possible Bearish Signals With Hammond Power Solutions Insiders Disposing Stock

Many Hammond Power Solutions Inc. (TSE:HPS.A) insiders ditched their stock over the past year, which may be of interest to the company's shareholders. Knowing whether insiders are buying is usually more helpful when evaluating insider transactions, as insider selling can have various explanations. However, if numerous insiders are selling, shareholders should investigate more.

While insider transactions are not the most important thing when it comes to long-term investing, we would consider it foolish to ignore insider transactions altogether.

View our latest analysis for Hammond Power Solutions

Hammond Power Solutions Insider Transactions Over The Last Year

Over the last year, we can see that the biggest insider sale was by the Independent Lead Director, Grant Robinson, for CA$1.4m worth of shares, at about CA$71.15 per share. That means that even when the share price was below the current price of CA$108, an insider wanted to cash in some shares. 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 28% of Grant Robinson's holding.

In the last twelve months insiders purchased 4.22k shares for CA$427k. But insiders sold 34.20k shares worth CA$2.5m. Over the last year we saw more insider selling of Hammond Power Solutions shares, than buying. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. By clicking on the graph below, you can see the precise details of each insider transaction!

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Hammond Power Solutions Insiders Bought Stock Recently

Over the last quarter, Hammond Power Solutions insiders have spent a meaningful amount on shares. Not only was there no selling that we can see, but they collectively bought CA$353k worth of shares. That shows some optimism about the company's future.

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. I reckon it's a good sign if insiders own a significant number of shares in the company. Hammond Power Solutions insiders own 30% of the company, currently worth about CA$360m based on the recent share price. Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.

What Might The Insider Transactions At Hammond Power Solutions Tell Us?

It is good to see recent purchasing. On the other hand the transaction history, over the last year, isn't so positive. The recent buying by some insiders , along with high insider ownership, suggest that Hammond Power Solutions insiders are fairly aligned, and optimistic. 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.

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 of direct interests only, but not derivative transactions or indirect interests.

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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@simplywallst.com