It is not uncommon to see companies perform well in the years after insiders buy shares. On the other hand, we'd be remiss not to mention that insider sales have been known to precede tough periods for a business. So before you buy or sell Ethan Allen Interiors Inc. (NYSE:ETH), you may well want to know whether insiders have been buying or selling.
What Is Insider Buying?
Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock in the company. However, most countries require that the company discloses such transactions to the market.
Insider transactions are not the most important thing when it comes to long-term investing. But it is perfectly logical to keep tabs on what insiders are doing. As Peter Lynch said, 'insiders might sell their shares for any number of reasons, but they buy them for only one: they think the price will rise'.
Ethan Allen Interiors Insider Transactions Over The Last Year
The Chairman of the Board M. Kathwari made the biggest insider purchase in the last 12 months. That single transaction was for US$294k worth of shares at a price of US$9.80 each. Even though the purchase was made at a significantly lower price than the recent price (US$23.37), we still think insider buying is a positive. Because the shares were purchased at a lower price, this particular buy doesn't tell us much about how insiders feel about the current share price.
M. Kathwari bought a total of 40.00k shares over the year at an average price of US$9.80. 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!
Ethan Allen Interiors 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.
Insiders at Ethan Allen Interiors Have Sold Stock Recently
Over the last three months, we've seen a bit of insider selling at Ethan Allen Interiors. Senior Vice President of Business Development Daniel Grow sold just US$30k worth of shares in that time. It's not great to see insider selling, nor the lack of recent buyers. But the selling simply isn't sufficiently substantial to be of much use as a signal.
Insider Ownership of Ethan Allen Interiors
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. Insiders own 14% of Ethan Allen Interiors shares, worth about US$79m. We've certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.
What Might The Insider Transactions At Ethan Allen Interiors Tell Us?
We did not see any insider buying in the last three months, but we did see selling. But the sales were small, so we're not concerned. However, our analysis of transactions over the last year is heartening. Overall we don't see anything to make us think Ethan Allen Interiors insiders are doubting the company, and they do own shares. 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. Every company has risks, and we've spotted 4 warning signs for Ethan Allen Interiors you should know about.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting 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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