Compass Diversified Insiders Added US$5.29m Of Stock To Their Holdings

Over the last year, a good number of insiders have significantly increased their holdings in Compass Diversified (NYSE:CODI). This is encouraging because it indicates that insiders are more optimistic about the company's prospects.

While insider transactions are not the most important thing when it comes to long-term investing, 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$22.96. Of course they may have changed their mind. But this suggests they are optimistic. While we always like to see insider buying, it's less meaningful if the purchases were made at much lower prices, as the opportunity they saw may have passed. The good news for Compass Diversified share holders is that insiders were buying at near the current price.

In the last twelve months Compass Diversified insiders were buying shares, but not selling. 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 under-the-radar companies with insider buying.

Compass Diversified Insiders Bought Stock Recently

It's good to see that Compass Diversified insiders have made notable investments in the company's shares. Partner & COO Patrick Maciariello spent US$109k on stock, and there wasn't any selling. This is a positive in our book as it implies some confidence.

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. We usually like to see fairly high levels of insider ownership. Insiders own 1.7% of Compass Diversified shares, worth about US$31m. While this is a strong but not outstanding level of insider ownership, it's enough to indicate some alignment between management and smaller shareholders.

So What Do The Compass Diversified Insider Transactions Indicate?

It is good to see the recent insider purchase. We also take confidence from the longer term picture of insider transactions. However, we note that the company didn't make a profit over the last twelve months, which makes us cautious. Given that insiders also own a fair bit of Compass Diversified we think they are probably pretty confident of a bright future. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. Be aware that Compass Diversified is showing 3 warning signs in our investment analysis, and 2 of those make us uncomfortable...

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

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