Insider Spends US$50k Buying More Shares In Eastern

Even if it's not a huge purchase, we think it was good to see that Frederick DiSanto, the Independent Director of The Eastern Company (NASDAQ:EML) recently shelled out US$50k to buy stock, at US$19.48 per share. Although the purchase is not a big one, increasing their shareholding by only 2.9%, it can be interpreted as a good sign.

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Eastern Insider Transactions Over The Last Year

In fact, the recent purchase by Independent Director Frederick DiSanto was not their only acquisition of Eastern shares this year. Earlier in the year, they paid US$23.00 per share in a US$114k purchase. That means that even when the share price was higher than US$19.49 (the recent price), an insider wanted to purchase shares. Their view may have changed since then, but at least it shows they felt optimistic at the time. In our view, the price an insider pays for shares is very important. As a general rule, we feel more positive about a stock if insiders have bought shares at above current prices, because that suggests they viewed the stock as good value, even at a higher price.

While Eastern 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 want to know exactly who sold, for how much, and when, simply click on the graph below!

View our latest analysis for Eastern

There are always plenty of stocks that insiders are buying. If investing in lesser known companies is your style, you could take a look at this free list of companies. (Hint: insiders have been buying them).

Insider Ownership Of Eastern

Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. 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 Eastern insiders own about US$8.4m worth of shares (which is 7.1% 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 Eastern Tell Us?

It is good to see the recent insider purchase. We also take confidence from the longer term picture of insider transactions. On this analysis the only slight negative we see is the fairly low (overall) insider ownership; their transactions suggest that they are quite positive on Eastern stock. While it's good to be aware of what's going on with the insider's ownership and transactions, we make sure to also consider what risks are facing a stock before making any investment decision. Every company has risks, and we've spotted 2 warning signs for Eastern (of which 1 doesn't sit too well with us!) you should know about.

Of course Eastern 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 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.