Insiders who bought stock earlier this year lose -US$3.3k as Avanos Medical, Inc. (NYSE:AVNS) drops to US$1.5b

By
Simply Wall St
Published
November 29, 2021
NYSE:AVNS
Source: Shutterstock

Insiders who bought US$158k worth of Avanos Medical, Inc.'s (NYSE:AVNS) stock at an average buy price of US$31.63 over the last year may be disappointed by the recent 6.7% decrease in the stock. Insiders purchase with the hope of seeing their investments increase in value over time. However, due to recent losses, their initial investment is now only worth US$155k, which is not great.

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.

View our latest analysis for Avanos Medical

Avanos Medical Insider Transactions Over The Last Year

Over the last year, we can see that the biggest insider purchase was by Independent Director Patrick O'Leary for US$158k worth of shares, at about US$31.67 per share. So it's clear an insider wanted to buy, even at a higher price than the current share price (being US$30.97). Their view may have changed since then, but at least it shows they felt optimistic at the time. To us, it's very important to consider the price insiders pay for shares. Generally speaking, it catches our eye when an insider has purchased shares at above current prices, as it suggests they believed the shares were worth buying, even at a higher price. Patrick O'Leary was the only individual insider to buy shares in the last twelve months.

You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

insider-trading-volume
NYSE:AVNS Insider Trading Volume November 30th 2021

Avanos Medical 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.

Insider Ownership

Many investors like to check how much of a company is owned by insiders. We usually like to see fairly high levels of insider ownership. It appears that Avanos Medical insiders own 0.8% of the company, worth about US$12m. While this is a strong but not outstanding level of insider ownership, it's enough to indicate some alignment between management and smaller shareholders.

What Might The Insider Transactions At Avanos Medical Tell Us?

It's certainly positive to see the recent insider purchase. We also take confidence from the longer term picture of insider transactions. 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 Avanos Medical insiders are well aligned, and that they may think the share price is too low. If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its future.

But note: Avanos Medical 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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