It is usually uneventful when a single insider buys stock. However, When quite a few insiders buy shares, as it happened in Fastenal Company's (NASDAQ:FAST) case, it's fantastic news for shareholders.
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.
The Last 12 Months Of Insider Transactions At Fastenal
Over the last year, we can see that the biggest insider purchase was by Independent Director Sarah Nielsen for US$56k worth of shares, at about US$55.76 per share. That implies that an insider found the current price of US$55.97 per share to be enticing. While their view may have changed since the purchase was made, this does at least suggest they have had confidence in the company's future. While we always like to see insider buying, it's less meaningful if the purchases were made at much lower prices, as the opportunity they saw may have passed. The good news for Fastenal share holders is that insiders were buying at near the current price.
Over the last year, we can see that insiders have bought 4.00k shares worth US$221k. But insiders sold 458.00 shares worth US$27k. In the last twelve months there was more buying than selling by Fastenal insiders. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of growing companies that insiders are buying.
Fastenal Insiders Bought Stock Recently
Over the last three months, we've seen a bit of insider buying at Fastenal. Independent Director Michael Ancius purchased US$42k worth of shares in that period. We like it when there are only buyers, and no sellers. But in this case the amount purchased means the recent transaction may not be very meaningful on its own.
Many investors like to check how much of a company is owned by 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. Fastenal insiders own 0.3% of the company, currently worth about US$112m 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.
What Might The Insider Transactions At Fastenal Tell Us?
Insider purchases may have been minimal, in the last three months, but there was no selling at all. Overall the buying isn't worth writing home about. However, our analysis of transactions over the last year is heartening. With high insider ownership and encouraging transactions, it seems like Fastenal insiders think the business has merit. So while it's helpful to know what insiders are doing in terms of buying or selling, it's also helpful to know the risks that a particular company is facing. In terms of investment risks, we've identified 1 warning sign with Fastenal and understanding this should be part of your investment process.
But note: Fastenal 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 currently account for open market transactions and private dispositions, but not derivative transactions.
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.