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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 FreightCar America, Inc. (NASDAQ:RAIL), it sends a favourable message to the company's shareholders.
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.
Check out our latest analysis for FreightCar America
The Last 12 Months Of Insider Transactions At FreightCar America
Over the last year, we can see that the biggest insider purchase was by Executive Chairman of the Board James Meyer for US$251k worth of shares, at about US$10.74 per share. That means that an insider was happy to buy shares at above the current price of US$9.83. 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. 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.
In the last twelve months insiders purchased 60.80k shares for US$403k. But they sold 32.50k shares for US$270k. In the last twelve months there was more buying than selling by FreightCar America insiders. The average buy price was around US$6.62. To my mind it is good that insiders have invested their own money in the company. But we must note that the investments were made at well below today's share price. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
FreightCar America is not the only stock insiders are buying. So take a peek at this free list of under-the-radar companies with insider buying.
FreightCar America Insiders Bought Stock Recently
There has been significantly more insider buying, than selling, at FreightCar America, over the last three months. In total, two insiders bought US$292k worth of shares in that time. On the other hand, Lead Independent Director William Gehl netted US$108k by selling. The buying outweighs the selling, which suggests that insiders may believe the company will do well in the future.
Insider Ownership Of FreightCar America
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. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. It appears that FreightCar America insiders own 14% of the company, worth about US$26m. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.