Graham Corporation (NYSE:GHM) insiders recover some losses but still US$45k away from matching original investment

By
Simply Wall St
Published
May 24, 2022
NYSE:GHM
Source: Shutterstock

Insiders who bought US$418k worth of Graham Corporation (NYSE:GHM) stock in the last year have seen some of their losses recouped as the stock gained 11% last week. The purchase, however, has proven to be a pricey bet, with losses currently totalling US$45k.

Although we don't think shareholders should simply follow insider transactions, we do think it is perfectly logical to keep tabs on what insiders are doing.

View our latest analysis for Graham

The Last 12 Months Of Insider Transactions At Graham

In the last twelve months, the biggest single purchase by an insider was when President Daniel Thoren bought US$99k worth of shares at a price of US$7.90 per share. That means that an insider was happy to buy shares at around the current price of US$8.19. 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. We do always like to see insider buying, but it is worth noting if those purchases were made at well below today's share price, as the discount to value may have narrowed with the rising price. In this case we're pleased to report that the insider purchases were made at close to current prices.

Happily, we note that in the last year insiders paid US$418k for 45.60k shares. But insiders sold 12.89k shares worth US$118k. Overall, Graham insiders were net buyers during the last year. Their average price was about US$9.17. I'd consider this a positive as it suggests insiders see value at around the current price. The chart below shows insider transactions (by companies and individuals) over the last year. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

insider-trading-volume
NYSE:GHM Insider Trading Volume May 24th 2022

Graham is not the only stock that insiders are buying. For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

Graham Insiders Are Selling The Stock

The last quarter saw substantial insider selling of Graham shares. In total, insider Jeffrey Glajch dumped US$81k worth of shares in that time, and we didn't record any purchases whatsoever. In light of this it's hard to argue that all the insiders think that the shares are a bargain.

Insider Ownership

Many investors like to check how much of a company is owned by insiders. We usually like to see fairly high levels of insider ownership. From our data, it seems that Graham insiders own 7.0% of the company, worth about US$6.1m. Whilst better than nothing, we're not overly impressed by these holdings.

So What Does This Data Suggest About Graham Insiders?

An insider sold Graham shares recently, but they didn't buy any. But we take heart from prior transactions. But insiders own relatively little of the company, from what we can see. So we can't be sure that insiders are optimistic. While we like knowing 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. Our analysis shows 4 warning signs for Graham (1 makes us a bit uncomfortable!) and we strongly recommend you look at them before investing.

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, but not derivative transactions.

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