We’ve lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So we’ll take a look at whether insiders have been buying or selling shares in Perma-Pipe International Holdings, Inc. (NASDAQ:PPIH).

What Is Insider Selling?

It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, such insiders must disclose their trading activities, and not trade on inside information.

We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. But equally, we would consider it foolish to ignore insider transactions altogether. As Peter Lynch said, ‘insiders might sell their shares for any number of reasons, but they buy them for only one: they think the price will rise.’

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Perma-Pipe International Holdings Insider Transactions Over The Last Year

Independent Director Mark. Zorko made the biggest insider sale in the last 12 months. That single transaction was for US$68k worth of shares at a price of US$8.75 each. So we know that an insider sold shares at around the present share price of US$8.60. They might be selling for a variety of reasons, but it’s hard to argue this is a bullish sign. Arguably, insider selling at around current prices should give us reason to reflect on whether the stock is fully valued at the moment.

Over the last year, we note insiders sold 9.53k shares worth US$82k. All up, insiders sold more shares in Perma-Pipe International Holdings than they bought, over the last year. The sellers received a price of around US$8.64, on average. It’s not particularly great to see insiders were selling shares around current prices. But we don’t put too much weight on the insider selling, since sellers could have personal reasons. 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 are like me, then you will not want to miss this free list of growing companies that insiders are buying.

Insiders at Perma-Pipe International Holdings Have Sold Stock Recently

Over the last three months, we’ve seen significant insider selling at Perma-Pipe International Holdings. Specifically, Mark. Zorko ditched US$68k worth of shares in that time, and we didn’t record any purchases whatsoever. In light of this it’s hard to argue that all the directors think that the shares are a bargain.

Insider Ownership of Perma-Pipe International Holdings

Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. 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 22% of Perma-Pipe International Holdings shares, worth about US$15m. We’ve certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.

What Might The Insider Transactions At Perma-Pipe International Holdings Tell Us?

An insider sold stock recently, but they haven’t been buying. And there weren’t any purchases to give us comfort, over the last year. Insiders own shares, but we’re still pretty cautious, given the history of sales. So we’d only buy after careful consideration. I like to dive deeper into how a company has performed in the past. You can access this interactive graph of past earnings, revenue and cash flow for free .

But note: Perma-Pipe International Holdings may not be the best stock to buy. So take a peek at this free list of interesting companies with high ROE and low debt.

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.