FreightCar America Insiders Benefit From Selling Stock At US$8.32

While FreightCar America, Inc. (NASDAQ:RAIL) shareholders have had a good week with the stock up 28%, insiders can't say the same having sold stock over the past year. Had they waited, they might have been able to sell their stock at much higher prices and thereby received a better value on their investment.

Although we don't think shareholders should simply follow insider transactions, we would consider it foolish to ignore insider transactions altogether.

Check out our latest analysis for FreightCar America

The Last 12 Months Of Insider Transactions At FreightCar America

Over the last year, we can see that the biggest insider purchase was by insider Alejandro Benavides for US$111k worth of shares, at about US$4.87 per share. Even though the purchase was made at a significantly lower price than the recent price (US$12.53), we still think insider buying is a positive. Because the shares were purchased at a lower price, this particular buy doesn't tell us much about how insiders feel about the current share price.

In the last twelve months insiders purchased 37.40k shares for US$151k. But they sold 32.50k shares for US$270k. In total, FreightCar America insiders sold more than they bought over the last year. The sellers received a price of around US$8.32, on average. We don't gain confidence from insider selling below the recent share price. But we wouldn't put too much weight on the insider selling. The chart below shows insider transactions (by companies and individuals) over the last year. 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 hidden gems this free list of small cap companies with recent insider purchasing, could be just the ticket.

Insiders At FreightCar America Have Sold Stock Recently

There was substantially more insider selling, than buying, of FreightCar America shares over the last three months. In that time, insiders dumped US$270k worth of shares. Meanwhile Independent Director Jose De Nigris Felan bought US$41k worth. Since the selling really does outweigh the buying, we'd say that these transactions may suggest that some insiders feel the company has been fully valued in recent months.

Insider Ownership Of FreightCar America

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. It appears that FreightCar America insiders own 14% of the company, worth about US$32m. While this is a strong but not outstanding level of insider ownership, it's enough to indicate some alignment between management and smaller shareholders.

So What Does This Data Suggest About FreightCar America Insiders?

Unfortunately, there has been more insider selling of FreightCar America stock, than buying, in the last three months. And our longer term analysis of insider transactions didn't bring confidence, either. Insider ownership isn't particularly high, so this analysis makes us cautious about the company. So we'd only buy after careful consideration. 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. At Simply Wall St, we found 3 warning signs for FreightCar America that deserve your attention before buying any shares.

But note: FreightCar America 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 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.