While PGT Innovations, Inc. (NYSE:PGTI) shareholders have had a good week with the stock up 8.2%, they shouldn't let their guards down. The fact that insiders chose to dispose of US$1.5m worth of stock in the past 12 months even though prices were relatively low could be indicative of some anticipated weakness.
Although we don't think shareholders should simply follow insider transactions, logic dictates you should pay some attention to whether insiders are buying or selling shares.
Innovations Insider Transactions Over The Last Year
In the last twelve months, the biggest single sale by an insider was when the Co-Founder & Chairman of the Board, Rodney Hershberger, sold US$759k worth of shares at a price of US$18.97 per share. So it's clear an insider wanted to take some cash off the table, even below the current price of US$23.77. As a general rule we consider it to be discouraging when insiders are selling below the current price, because it suggests they were happy with a lower valuation. 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. It is worth noting that this sale was only 2.8% of Rodney Hershberger's holding.
Innovations insiders didn't buy any shares over the last year. 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!
I will like Innovations better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
Does Innovations Boast High Insider Ownership?
Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. A high insider ownership often makes company leadership more mindful of shareholder interests. Insiders own 4.3% of Innovations shares, worth about US$60m. We've certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.
What Might The Insider Transactions At Innovations Tell Us?
There haven't been any insider transactions in the last three months -- that doesn't mean much. We don't take much encouragement from the transactions by Innovations insiders. But we do like the fact that insiders own a fair chunk of the company. 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. To that end, you should learn about the 3 warning signs we've spotted with Innovations (including 1 which is potentially serious).
But note: Innovations 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.
When trading Innovations or any other investment, use the platform considered by many to be the Professional's Gateway to the Worlds Market, Interactive Brokers. You get the lowest-cost* trading on stocks, options, futures, forex, bonds and funds worldwide from a single integrated account. Promoted
*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.