With stock up 11%, Insiders of CSP Inc. (NASDAQ:CSPI) must be wishing they had bought more last year
CSP Inc. (NASDAQ:CSPI) insiders who purchased shares in the last 12 months were richly rewarded last week. The stock climbed by 11% resulting in a US$3.7m addition to the company’s market value. As a result, the stock they originally bought for US$205k is now worth US$206k.
While insider transactions are not the most important thing when it comes to long-term investing, logic dictates you should pay some attention to whether insiders are buying or selling shares.
See our latest analysis for CSP
The Last 12 Months Of Insider Transactions At CSP
Notably, that recent purchase by Joseph Nerges is the biggest insider purchase of CSP shares that we've seen in the last year. That implies that an insider found the current price of US$7.82 per share to be enticing. Of course they may have changed their mind. But this suggests they are optimistic. We do always like to see insider buying, but it is worth noting if those purchases were made at well below today's share price, as the discount to value may have narrowed with the rising price. Happily, the CSP insider decided to buy shares at close to current prices. Joseph Nerges was the only individual insider to buy shares in the last twelve months.
Joseph Nerges bought a total of 26.39k shares over the year at an average price of US$7.78. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
There are always plenty of stocks that insiders are buying. So if that suits your style you could check each stock one by one or you could take a look at this free list of companies. (Hint: insiders have been buying them).
Insiders at CSP Have Bought Stock Recently
At CSP,over the last quarter, we have observed quite a lot more insider buying than insider selling. We can see that insider Joseph Nerges paid US$113k for shares in the company. But we did see VP of Finance Gary Levine sell shares worth US$7.8k. Insiders have spent more buying shares than they have selling, so on balance we think they are are probably optimistic.
Insider Ownership of CSP
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Insiders own 29% of CSP shares, worth about US$10m. While this is a strong but not outstanding level of insider ownership, it's enough to indicate some alignment between management and smaller shareholders.
So What Does This Data Suggest About CSP Insiders?
It's certainly positive to see the recent insider purchase. And the longer term insider transactions also give us confidence. However, we note that the company didn't make a profit over the last twelve months, which makes us cautious. When combined with notable insider ownership, these factors suggest CSP insiders are well aligned, and that they may think the share price is too low. So while it's helpful to know what insiders are doing in terms of buying or selling, it's also helpful to know the risks that a particular company is facing. For example, CSP has 3 warning signs (and 1 which is concerning) we think you should know about.
Of course CSP 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, but not derivative transactions.
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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.
