Stock Analysis

Don't Ignore The Fact That This Insider Just Sold Some Shares In Insteel Industries, Inc. (NYSE:IIIN)

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Anyone interested in Insteel Industries, Inc. (NYSE:IIIN) should probably be aware that the VP of Administration, James Petelle, recently divested US$110k worth of shares in the company, at an average price of US$45.84 each. That sale was 12% of their holding, so it does make us raise an eyebrow.

Check out our latest analysis for Insteel Industries

The Last 12 Months Of Insider Transactions At Insteel Industries

Over the last year, we can see that the biggest insider sale was by the President, Howard Woltz, for US$418k worth of shares, at about US$41.83 per share. That means that even when the share price was below the current price of US$44.57, an insider wanted to cash in some shares. We generally consider it a negative if insiders have been selling, especially if they did so below the current price, because it implies that they considered a lower price to be reasonable. While insider selling is not a positive sign, we can't be sure if it does mean insiders think the shares are fully valued, so it's only a weak sign. We note that the biggest single sale was only 1.9% of Howard Woltz's holding.

Insiders in Insteel Industries didn't buy any shares in the last year. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

NYSE:IIIN Insider Trading Volume May 8th 2022

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Does Insteel Industries Boast High Insider Ownership?

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. A high insider ownership often makes company leadership more mindful of shareholder interests. Insiders own 3.9% of Insteel Industries shares, worth about US$34m. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.

So What Does This Data Suggest About Insteel Industries Insiders?

An insider sold Insteel Industries shares recently, but they didn't buy any. And even if we look at the last year, we didn't see any purchases. But it is good to see that Insteel Industries is growing earnings. Insiders own shares, but we're still pretty cautious, given the history of sales. So we'd only buy after careful consideration. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. Every company has risks, and we've spotted 3 warning signs for Insteel Industries (of which 2 don't sit too well with us!) you should know about.

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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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