Insiders who bought Veritiv Corporation (NYSE:VRTV) last year must be regretting not buying more as market cap hits US$1.9b

By
Simply Wall St
Published
March 18, 2022
NYSE:VRTV
Source: Shutterstock

Veritiv Corporation (NYSE:VRTV) insiders who bought shares over the past year were rewarded handsomely last week. The stock rose 7.8%, resulting in a US$133m rise in the company's market capitalisation. As a result, their original purchase of US$387k worth of stock is now worth US$819k.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we do think it is perfectly logical to keep tabs on what insiders are doing.

Check out our latest analysis for Veritiv

Veritiv Insider Transactions Over The Last Year

Over the last year, we can see that the biggest insider purchase was by Independent Chairman Stephen Macadam F. for US$197k worth of shares, at about US$39.49 per share. Even though the purchase was made at a significantly lower price than the recent price (US$126), we still think insider buying is a positive. Because it occurred at a lower valuation, it doesn't tell us much about whether insiders might find today's price attractive.

Stephen Macadam F. bought a total of 6.50k shares over the year at an average price of US$59.60. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

insider-trading-volume
NYSE:VRTV Insider Trading Volume March 18th 2022

Veritiv 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 Veritiv

Many investors like to check how much of a company is owned by insiders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Veritiv insiders own 5.7% of the company, currently worth about US$106m based on the recent share price. Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.

So What Do The Veritiv Insider Transactions Indicate?

There haven't been any insider transactions in the last three months -- that doesn't mean much. However, our analysis of transactions over the last year is heartening. With high insider ownership and encouraging transactions, it seems like Veritiv insiders think the business has merit. 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. In terms of investment risks, we've identified 2 warning signs with Veritiv and understanding these should be part of your investment process.

But note: Veritiv 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.

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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