Thomas Riordan Is The Lead Independent Director of The L.S. Starrett Company (NYSE:SCX) And They Just Picked Up 45% More Shares

Whilst it may not be a huge deal, we thought it was good to see that the The L.S. Starrett Company (NYSE:SCX) Lead Independent Director, Thomas Riordan, recently bought US$76k worth of stock, for US$4.19 per share. While we're hesitant to get too excited about a purchase of that size, we do note it increased their holding by a solid 45%.

View our latest analysis for L.S. Starrett

The Last 12 Months Of Insider Transactions At L.S. Starrett

In fact, the recent purchase by Lead Independent Director Thomas Riordan was not their only acquisition of L.S. Starrett shares this year. They previously made an even bigger purchase of US$139k worth of shares at a price of US$5.14 per share. That means that even when the share price was higher than US$4.27 (the recent price), an insider wanted to purchase shares. 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. In our view, the price an insider pays for shares is very important. As a general rule, we feel more positive about a stock if insiders have bought shares at above current prices, because that suggests they viewed the stock as good value, even at a higher price.

In the last twelve months L.S. Starrett insiders were buying shares, but not selling. They paid about US$4.06 on average. Although they bought at below the recent share price, it is good to see that insiders are willing to invest in the company. 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!

L.S. Starrett 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.

Does L.S. Starrett Boast High Insider Ownership?

Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. I reckon it's a good sign if insiders own a significant number of shares in the company. From looking at our data, insiders own US$1.2m worth of L.S. Starrett stock, about 4.0% of the company. We consider this fairly low insider ownership.

What Might The Insider Transactions At L.S. Starrett Tell Us?

The recent insider purchase is heartening. We also take confidence from the longer term picture of insider transactions. However, we note that the company didn't make a profit over the last twelve months, which makes us cautious. On this analysis the only slight negative we see is the fairly low (overall) insider ownership; their transactions suggest that they are quite positive on L.S. Starrett stock. 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 L.S. Starrett you should know about.

Of course L.S. Starrett 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. 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.
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