We've lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. On the other hand, we'd be remiss not to mention that insider sales have been known to precede tough periods for a business. So shareholders might well want to know whether insiders have been buying or selling shares in Cantel Medical Corp. (NYSE:CMD).
What Is Insider Buying?
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, such insiders must disclose their trading activities, and not trade on inside information.
Insider transactions are not the most important thing when it comes to long-term investing. But logic dictates you should pay some attention to whether insiders are buying or selling shares. 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'.
The Last 12 Months Of Insider Transactions At Cantel Medical
The Chairman & Member of Office of the Chairman, Charles Diker, made the biggest insider sale in the last 12 months. That single transaction was for US$567k worth of shares at a price of US$70.86 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$31.83. So it may not shed much light on insider confidence at current levels. Charles Diker was the only individual insider to sell over the last year.
Over the last year, we can see that insiders have bought 33.25k shares worth US$1.3m. But they sold 8000 shares for US$567k. In total, Cantel Medical insiders bought more than they sold over the last year. They paid about US$40.07 on average. This is nice to see since it implies that insiders might see value around current prices. You can see the insider transactions (by 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!
Cantel Medical is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Insiders at Cantel Medical Have Bought Stock Recently
It's good to see that Cantel Medical insiders have made notable investments in the company's shares. In total, insiders bought US$1.0m worth of shares in that time, and we didn't record any sales whatsoever. This could be interpreted as suggesting a positive outlook.
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. Cantel Medical insiders own about US$147m worth of shares (which is 11% of the company). Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.
So What Do The Cantel Medical Insider Transactions Indicate?
The recent insider purchases are heartening. We also take confidence from the longer term picture of insider transactions. When combined with notable insider ownership, these factors suggest Cantel Medical insiders are well aligned, and quite possibly think the share price is too low. That's what I like to see! So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. Be aware that Cantel Medical is showing 4 warning signs in our investment analysis, and 1 of those is a bit concerning...
If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, that have HIGH return on equity and low debt.
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.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
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