With INNOVATE Up 11%, Insider Buyers Count Their Returns

INNOVATE Corp. (NYSE:VATE) insiders who bought shares over the past year were rewarded handsomely last week. The stock rose 11%, resulting in a US$7.8m rise in the company's market capitalisation, translating to a gain of 52% on their initial investment. As a result, their original purchase of US$265.9k worth of stock is now worth US$405.1k.

Although we don't think shareholders should simply follow insider transactions, we would consider it foolish to ignore insider transactions altogether.

This technology could replace computers: discover the 20 stocks are working to make quantum computing a reality.

The Last 12 Months Of Insider Transactions At INNOVATE

Over the last year, we can see that the biggest insider purchase was by Interim Chief Executive Officer Paul Voigt for US$166k worth of shares, at about US$3.80 per share. Although we like to see insider buying, we note that this large purchase was at significantly below the recent price of US$5.89. While it does suggest insiders consider the stock undervalued at lower prices, this transaction doesn't tell us much about what they think of current prices.

Paul Voigt bought a total of 68.79k shares over the year at an average price of US$3.87. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. By clicking on the graph below, you can see the precise details of each insider transaction!

See our latest analysis for INNOVATE

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

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. INNOVATE insiders own about US$50m worth of shares (which is 64% of the company). 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?

It doesn't really mean much that no insider has traded INNOVATE shares in the last quarter. 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. Every company has risks, and we've spotted 3 warning signs for INNOVATE (of which 1 doesn't sit too well with us!) you should know about.

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 of direct interests only, but not derivative transactions or indirect interests.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.