Stock Analysis

After a 5.4% dip, insiders are undoubtedly glad they sold Ingevity Corporation (NYSE:NGVT)

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NYSE:NGVT
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By selling US$67k worth of Ingevity Corporation (NYSE:NGVT) stock at an average sell price of US$77.84 over the last year, insiders seemed to have made the most of their holdings. The company's market valuation decreased by US$158m after the stock price dropped 5.4% over the past week, but insiders were spared from painful losses.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we do think it is perfectly logical to keep tabs on what insiders are doing.

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The Last 12 Months Of Insider Transactions At Ingevity

In fact, the recent sale by Erik Ripple was the biggest sale of Ingevity shares made by an insider individual in the last twelve months, according to our records. So we know that an insider sold shares at around the present share price of US$74.05. While we don't usually like to see insider selling, it's more concerning if the sales take place at a lower price. In this case, the big sale took place at around the current price, so it's not too bad (but it's still not a positive).

You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

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NYSE:NGVT Insider Trading Volume December 8th 2022

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Insiders At Ingevity Have Sold Stock Recently

The last quarter saw substantial insider selling of Ingevity shares. In total, Senior VP and Chief Growth & Innovation Officer Erik Ripple sold US$67k worth of shares in that time, and we didn't record any purchases whatsoever. This may suggest that some insiders think that the shares are not cheap.

Insider Ownership

Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. We usually like to see fairly high levels of insider ownership. It appears that Ingevity insiders own 0.5% of the company, worth about US$14m. 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 Ingevity Insider Transactions Indicate?

An insider sold stock recently, but they haven't been buying. And there weren't any purchases to give us comfort, over the last year. But it is good to see that Ingevity is growing earnings. Insider ownership isn't particularly high, so this analysis makes us cautious about the company. We're in no rush to buy! 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. In terms of investment risks, we've identified 2 warning signs with Ingevity and understanding these should be part of your investment process.

But note: Ingevity 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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Find out whether Ingevity is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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