Insiders Could Have Profited By Holding onto AMMO Shares Despite 27% Drop

AMMO, Inc.'s (NASDAQ:POWW) stock price has dropped 27% in the previous week, but insiders who sold US$1.1m in stock over the past year have had less luck. The average selling price of US$2.46 is still lower than the current share price, or in other words, insiders would have been better off holding on to their shares.

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

Check out our latest analysis for AMMO

The Last 12 Months Of Insider Transactions At AMMO

In the last twelve months, the biggest single sale by an insider was when the Founder & Executive Chairman of Board, Fred Wagenhals, sold US$537k worth of shares at a price of US$2.43 per share. We generally don't like to see insider selling, but the lower the sale price, the more it concerns us. It's of some comfort that this sale was conducted at a price well above the current share price, which is US$1.79. So it is hard to draw any strong conclusion from it. Fred Wagenhals was the only individual insider to sell shares in the last twelve months.

Fred Wagenhals ditched 450.00k shares over the year. The average price per share was US$2.46. 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 AMMO better if I see some big insider buys. While we wait, check out this free list of undervalued and small cap stocks with considerable, recent, insider buying.

Insider Ownership Of AMMO

Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. A high insider ownership often makes company leadership more mindful of shareholder interests. AMMO insiders own about US$74m worth of shares. That equates to 25% of the company. We've certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.

So What Does This Data Suggest About AMMO Insiders?

It doesn't really mean much that no insider has traded AMMO shares in the last quarter. Still, the insider transactions at AMMO in the last 12 months are not very heartening. The modest level of insider ownership is, at least, some comfort. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. Case in point: We've spotted 1 warning sign for AMMO you should be aware of.

But note: AMMO 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 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.

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