It is not uncommon to see companies perform well in the years after insiders buy shares. The flip side of that is that there are more than a few examples of insiders dumping stock prior to a period of weak performance. So before you buy or sell Altra Industrial Motion Corp. (NASDAQ:AIMC), you may well want to know whether insiders have been buying or selling.
What Is Insider Selling?
Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock in the company. However, rules govern insider transactions, and certain disclosures are required.
We don't think shareholders should simply follow insider transactions. But equally, we would consider it foolish to ignore insider transactions altogether. For example, a Columbia University study found that 'insiders are more likely to engage in open market purchases of their own company’s stock when the firm is about to reveal new agreements with customers and suppliers'.
See our latest analysis for Altra Industrial Motion
The Last 12 Months Of Insider Transactions At Altra Industrial Motion
The VP & CFO, Christian Storch, made the biggest insider sale in the last 12 months. That single transaction was for US$692k worth of shares at a price of US$37.23 each. While insider selling is a negative, to us, it is more negative if the shares are sold at a lower price. The good news is that this large sale was at well above current price of US$27.03. So it may not tell us anything about how insiders feel about the current share price.
Over the last year, we can see that insiders have bought 18000 shares worth US$642k. But they sold 28496 for US$944k. In total, Altra Industrial Motion insiders sold more than they bought over the last year. You can see the insider transactions (by individuals) over the last year depicted in the chart below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
If you like to buy stocks that insiders are buying, rather than selling, then you might just love this free list of companies. (Hint: insiders have been buying them).
Altra Industrial Motion Insiders Are Selling The Stock
Over the last three months, we've seen significant insider selling at Altra Industrial Motion. In total, Lead Director Larry McPherson sold US$252k worth of shares in that time, and we didn't record any purchases whatsoever. Overall this makes us a bit cautious, but it's not the be all and end all.
Does Altra Industrial Motion Boast High Insider Ownership?
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. A high insider ownership often makes company leadership more mindful of shareholder interests. Insiders own 1.1% of Altra Industrial Motion shares, worth about US$20m. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.