As Kennametal Inc. (NYSE:KMT) drops to US$2.1b market cap, insiders might rethink their US$962k stock purchase earlier this year

Insiders who acquired US$962k worth of Kennametal Inc.'s (NYSE:KMT) stock at an average price of US$26.23 in the past 12 months may be dismayed by the recent 3.9% price decline. Insiders invest with the hopes of seeing their money grow in value over time. However, as a result of recent losses, their initial investment is now only worth US$939k, which is not what they expected.

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.

View our latest analysis for Kennametal

The Last 12 Months Of Insider Transactions At Kennametal

In the last twelve months, the biggest single purchase by an insider was when Independent Director William Lambert bought US$962k worth of shares at a price of US$26.23 per share. That means that even when the share price was higher than US$25.58 (the recent price), an insider wanted to purchase shares. It's very possible they regret the purchase, but it's more likely they are bullish about the company. We always take careful note of the price insiders pay when purchasing shares. It is encouraging to see an insider paid above the current price for shares, as it suggests they saw value, even at higher levels. The only individual insider to buy over the last year was William Lambert.

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!

Kennametal is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.

Insiders At Kennametal Have Sold Stock Recently

The last three months saw some Kennametal insider selling. VP of Finance & Corporate Controller John Witt divested only US$45k worth of shares in that time. It's not great to see insider selling, nor the lack of recent buyers. But the selling simply isn't sufficiently substantial to be of much use as a signal.

Does Kennametal 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. We usually like to see fairly high levels of insider ownership. Insiders own 0.8% of Kennametal shares, worth about US$16m. 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 Kennametal Insiders?

We did not see any insider buying in the last three months, but we did see selling. But the sales were small, so we're not concerned. On a brighter note, the transactions over the last year are encouraging. Insiders do have a stake in Kennametal and their transactions don't cause us concern. 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. Every company has risks, and we've spotted 2 warning signs for Kennametal you should know about.

Of course Kennametal 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, but not derivative transactions.

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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.