Some Advanced Drainage Systems, Inc. (NYSE:WMS) Shareholders might be a little concerned that chief accounting officer Tim Makowski recently sold US$741,000 worth of stock at US$142 per share. It’s a big divestment, and it reduced the size of their operation by 17%, which is remarkable but not too bad.
The last 12 months of insider trading at Advanced Drainage Systems
In the past year, we can see that the biggest insider sale was by Executive Vice President of Supply Chain Darin Harvey for $2.3 million worth of stock, at around $113 per share. This means that even when the stock price was below the current price of US$149, an insider wanted to cash in some shares. We generally consider it negative if insiders sold, especially if they did below the current price, as this implies that they considered a lower price to be reasonable. However, while insider selling is sometimes discouraging, this is only a weak signal. This single sale represented 50% of Darin Harvey’s stake.
Last year, Advanced Drainage Systems insiders did not buy any shares of the company. The chart below shows insider trading (by companies and individuals) over the past year. By clicking on the graph below, you will be able to see the precise detail of each insider trade!
I would like Advanced Drainage Systems better if I see big insider buys. In the meantime, watch this free list of growing companies with significant and recent insider buying.
Do advanced drainage systems enjoy high insider ownership?
Examining the total insider holdings in a company can help you know if they are well aligned with common shareholders. Usually, the higher the insider ownership, the more likely it is that insiders will have an incentive to build the business for the long term. It’s great to see that Advanced Drainage Systems insiders own 1.2% of the company, worth approximately $149 million. I like to see this level of insider ownership because it increases the chances that management is thinking about the best interests of shareholders.
So what does this data suggest about insiders of advanced drainage systems?
Insiders haven’t bought any Advanced Drainage Systems stock in the past three months, but there have been some selling. And there have been no purchases to comfort us in the past year. On the positive side, Advanced Drainage Systems is making money and increasing profits. Although insiders hold a lot of stock in the company (which is good), our analysis of their dealings does not give us confidence in the company. So these insider trades can help us build a thesis on the stock, but it’s also helpful to know the risks this company faces. Example: we have identified 3 warning signs for advanced drainage systems you should be aware.
If you’d rather check out another company – one with potentially superior finances – then don’t miss this free list of attractive companies, which have a high return on equity and low debt.
For the purposes of this article, insiders are persons who report their transactions to the relevant regulatory body. We currently record open market transactions and private dispositions, but not derivative transactions.
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