Bullish Compass Diversified Insiders Loaded Up On US$3.67m Of Stock

In the last year, multiple insiders have substantially increased their holdings of Compass Diversified (NYSE:CODI) stock, indicating that insiders' optimism about the company's prospects has increased.

Although we don't think shareholders should simply follow insider transactions, logic dictates you should pay some attention to whether insiders are buying or selling shares.

Check out our latest analysis for Compass Diversified

Compass Diversified Insider Transactions Over The Last Year

The Partner & CEO Elias Sabo made the biggest insider purchase in the last 12 months. That single transaction was for US$2.0m worth of shares at a price of US$22.95 each. So it's clear an insider wanted to buy, at around the current price, which is US$23.40. Of course they may have changed their mind. But this suggests they are optimistic. If someone buys shares at well below current prices, it's a good sign on balance, but keep in mind they may no longer see value. In this case we're pleased to report that the insider purchases were made at close to current prices.

While Compass Diversified insiders bought shares during the last year, they didn't sell. 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!

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

Insiders At Compass Diversified Have Bought Stock Recently

Over the last three months, we've seen significant insider buying at Compass Diversified. Overall, 11 insiders shelled out US$3.4m for shares in the company -- and none sold. This is a positive in our book as it implies some confidence.

Insider Ownership Of Compass Diversified

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. Insiders own 2.5% of Compass Diversified shares, worth about US$44m. 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 Compass Diversified Tell Us?

It's certainly positive to see the recent insider purchases. And the longer term insider transactions also give us confidence. But on the other hand, the company made a loss during the last year, which makes us a little cautious. When combined with notable insider ownership, these factors suggest Compass Diversified insiders are well aligned, and that they may think the share price is too low. 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 2 warning signs for Compass Diversified (of which 1 makes us a bit uncomfortable!) you should know about.

Of course Compass Diversified 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.

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