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It is not uncommon to see companies perform well in the years after insiders buy shares. 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 Columbus McKinnon Corporation (NASDAQ:CMCO).
What Is Insider Selling?
Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock on the market. However, such insiders must disclose their trading activities, and not trade on inside information.
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 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 Columbus McKinnon
In the last twelve months, the biggest single sale by an insider was when the Vice President of Crane Solutions, Peter McCormick, sold US$801k worth of shares at a price of US$38.88 per share. So it’s clear an insider wanted to take some cash off the table, even slightly below the current price of US$39.41. 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 49.9% of Peter McCormick’s holding. Peter McCormick was the only individual insider to sell shares in the last twelve months.
Peter McCormick divested 36299 shares over the last 12 months at an average price of US$38.46. You can see the insider transactions (by individuals) over the last year depicted in the chart below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.
Insider Ownership of Columbus McKinnon
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. We usually like to see fairly high levels of insider ownership. It appears that Columbus McKinnon insiders own 1.9% of the company, worth about US$18m. We’ve certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.
What Might The Insider Transactions At Columbus McKinnon Tell Us?
An insider sold Columbus McKinnon shares recently, but they didn’t buy any. And there weren’t any purchases to give us comfort, over the last year. But since Columbus McKinnon is profitable and growing, we’re not too worried by this. Insiders own shares, but we’re still pretty cautious, given the history of sales. So we’d only buy after careful consideration. Of course, the future is what matters most. So if you are interested in Columbus McKinnon, you should check out this free report on analyst forecasts for the company.
But note: Columbus McKinnon 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.
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If you spot an error that warrants correction, please contact the editor at email@example.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.