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Generally, when a single insider buys stock, it is usually not a big deal. However, when several insiders are buying, like in the case of Culp, Inc. (NYSE:CULP), it sends a favourable message to the company's shareholders.
While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, logic dictates you should pay some attention to whether insiders are buying or selling shares.
View our latest analysis for Culp
Culp Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider purchase was by President Robert Culp for US$92k worth of shares, at about US$5.71 per share. That means that even when the share price was higher than US$5.55 (the recent price), an insider wanted to purchase shares. While their view may have changed since the purchase was made, this does at least suggest they have had confidence in the company's future. To us, it's very important to consider the price insiders pay for shares. 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.
Culp insiders may have bought shares in the last year, but they didn't sell any. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. 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.
Culp Insiders Bought Stock Recently
Over the last three months, we've seen significant insider buying at Culp. Not only was there no selling that we can see, but they collectively bought US$111k worth of shares. This could be interpreted as suggesting a positive outlook.
Does Culp Boast High 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. I reckon it's a good sign if insiders own a significant number of shares in the company. From our data, it seems that Culp insiders own 8.1% of the company, worth about US$5.5m. Whilst better than nothing, we're not overly impressed by these holdings.
So What Does This Data Suggest About Culp Insiders?
It's certainly positive to see the recent insider purchases. And the longer term insider transactions also give us confidence. But we don't feel the same about the fact the company is making losses. On this analysis the only slight negative we see is the fairly low (overall) insider ownership; their transactions suggest that they are quite positive on Culp stock. While it's good to be aware of 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 1 warning sign with Culp and understanding it should be part of your investment process.