Wolfspeed Insiders Added US$1.7m Of Stock To Their Holdings

Quite a few insiders have dramatically grown their holdings in Wolfspeed, Inc. (NYSE:WOLF) over the past 12 months. An insider's optimism about the company's prospects is a positive sign.

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.

Check out our latest analysis for Wolfspeed

The Last 12 Months Of Insider Transactions At Wolfspeed

Over the last year, we can see that the biggest insider purchase was by Independent Director John Replogle for US$502k worth of shares, at about US$47.54 per share. That means that even when the share price was higher than US$37.55 (the recent price), an insider wanted to purchase shares. Their view may have changed since then, but at least it shows they felt optimistic at the time. In our view, the price an insider pays for shares is very important. As a general rule, we feel more positive about a stock if insiders have bought shares at above current prices, because that suggests they viewed the stock as good value, even at a higher price.

Wolfspeed insiders may have bought shares in the last year, but they didn't sell any. Their average price was about US$57.47. This is nice to see since it implies that insiders might see value around current prices. The chart below shows insider transactions (by companies and individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

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

Insiders At Wolfspeed Have Bought Stock Recently

It's good to see that Wolfspeed insiders have made notable investments in the company's shares. We can see that Independent Director Duy-Loan Le paid US$235k for shares in the company. No-one sold. This makes one think the business has some good points.

Insider Ownership Of Wolfspeed

Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. We usually like to see fairly high levels of insider ownership. It appears that Wolfspeed insiders own 0.7% of the company, worth about US$34m. 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 Wolfspeed Insider Transactions Indicate?

It is good to see the recent insider purchase. 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. Insiders likely see value in Wolfspeed shares, given these transactions (along with notable insider ownership of the company). So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. In terms of investment risks, we've identified 2 warning signs with Wolfspeed and understanding these should be part of your investment process.

Of course Wolfspeed 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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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.