Insiders of INNOVATE Corp. (NYSE:VATE) are probably glad they bought last year as their US$18m investment now stands at US$20m

By
Simply Wall St
Published
November 30, 2021
NYSE:VATE
Source: Shutterstock

Insiders who bought INNOVATE Corp. (NYSE:VATE) in the last 12 months may probably not pay attention to the stock's recent 12% drop. Reason being, despite the recent loss, insiders original purchase value of US$18m is now worth US$20m.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we would consider it foolish to ignore insider transactions altogether.

View our latest analysis for INNOVATE

The Last 12 Months Of Insider Transactions At INNOVATE

In the last twelve months, the biggest single purchase by an insider was when Independent Chairman of the Board Avram Glazer bought US$9.0m worth of shares at a price of US$3.54 per share. So it's clear an insider wanted to buy, at around the current price, which is US$3.81. 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. While we always like to see insider buying, it's less meaningful if the purchases were made at much lower prices, as the opportunity they saw may have passed. The good news for INNOVATE share holders is that insiders were buying at near the current price.

In the last twelve months insiders purchased 5.12m shares for US$18m. But insiders sold 26.84k shares worth US$96k. In the last twelve months there was more buying than selling by INNOVATE insiders. The chart below shows insider transactions (by companies and individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!

insider-trading-volume
NYSE:VATE Insider Trading Volume December 1st 2021

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

Insider Ownership of INNOVATE

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. It's great to see that INNOVATE insiders own 40% of the company, worth about US$118m. This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.

So What Does This Data Suggest About INNOVATE Insiders?

The fact that there have been no INNOVATE insider transactions recently certainly doesn't bother us. However, our analysis of transactions over the last year is heartening. Judging from their transactions, and high insider ownership, INNOVATE insiders feel good about the company's future. 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. Case in point: We've spotted 1 warning sign for INNOVATE you should be aware of.

Of course INNOVATE 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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