Insiders Who Purchased US$6.45m Of Alto Ingredients Stock May Not Have Expected 16% Tumble

The recent 16% drop in Alto Ingredients, Inc.'s (NASDAQ:ALTO) stock could come as a blow to insiders who purchased US$6.45m worth of stock at an average buy price of US$1.66 over the past 12 months. This is not good as insiders invest based on expectations that their money will appreciate over time. However, as a result of recent losses, their original investment is now worth only US$5.11m.

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.

See our latest analysis for Alto Ingredients

The Last 12 Months Of Insider Transactions At Alto Ingredients

The insider Bradley Radoff made the biggest insider purchase in the last 12 months. That single transaction was for US$5.5m worth of shares at a price of US$1.86 each. So it's clear an insider wanted to buy, even at a higher price than the current share price (being US$1.32). It's very possible they regret the purchase, but it's more likely they are bullish about the company. In our view, the price an insider pays for shares is very important. Generally speaking, it catches our eye when insiders have purchased shares at above current prices, as it suggests they believed the shares were worth buying, even at a higher price.

In the last twelve months Alto Ingredients insiders were buying shares, but not selling. The average buy price was around US$1.66. These transactions suggest that insiders have considered the current price attractive. The chart below shows insider transactions (by companies and individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!

There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of undervalued small cap companies that insiders are buying.

Alto Ingredients Insiders Bought Stock Recently

Over the last quarter, Alto Ingredients insiders have spent a meaningful amount on shares. Not only was there no selling that we can see, but they collectively bought US$6.3m worth of shares. This makes one think the business has some good points.

Insider Ownership Of Alto Ingredients

For a common shareholder, it is worth checking how many shares are held by company insiders. I reckon it's a good sign if insiders own a significant number of shares in the company. It appears that Alto Ingredients insiders own 10.0% of the company, worth about US$11m. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.

So What Do The Alto Ingredients Insider Transactions Indicate?

It is good to see recent purchasing. And an analysis of the transactions over the last year also gives us confidence. But we don't feel the same about the fact the company is making losses. Insiders likely see value in Alto Ingredients shares, given these transactions (along with notable insider ownership of the company). Of course, the future is what matters most. So if you are interested in Alto Ingredients, you should check out this free report on analyst forecasts for the company.

But note: Alto Ingredients 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.

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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.