Yahoo Finance As GrafTech International Ltd. (NYSE:EAF) hits US$3.5b market cap, insiders may be dismayed about not purchasing higher quantities
Last week, GrafTech International Ltd. (NYSE:EAF) insiders, who had purchased shares in the previous 12 months were rewarded handsomely. The shares increased by 5.5% last week, resulting in a US$182m increase in the company's market worth. As a result, the stock they originally bought for US$446k is now worth US$462k.
While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we would consider it foolish to ignore insider transactions altogether.
See our latest analysis for GrafTech International
The Last 12 Months Of Insider Transactions At GrafTech International
In fact, the recent purchase by Jean-Marc Germain was the biggest purchase of GrafTech International shares made by an insider individual in the last twelve months, according to our records. That implies that an insider found the current price of US$13.19 per share to be enticing. While their view may have changed since the purchase was made, this does at least suggest they have had confidence in the company's future. If someone buys shares at well below current prices, it's a good sign on balance, but keep in mind they may no longer see value. The good news for GrafTech International share holders is that an insider was buying at near the current price. Jean-Marc Germain was the only individual insider to buy shares in the last twelve months.
The chart below shows insider transactions (by companies and individuals) over the last year. 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).
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. I reckon it's a good sign if insiders own a significant number of shares in the company. Our data suggests GrafTech International insiders own 0.1% of the company, worth about US$4.5m. We consider this fairly low insider ownership.
What Might The Insider Transactions At GrafTech International Tell Us?
The recent insider purchase is heartening. We also take confidence from the longer term picture of insider transactions. We would certainly prefer see higher levels of insider ownership but analysis of the insider transactions suggests that GrafTech International insiders are expecting a bright future. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. Case in point: We've spotted 2 warning signs for GrafTech International you should be aware of, and 1 of them shouldn't be ignored.
Of course GrafTech International 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.
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.
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