Some Argan, Inc. (NYSE:AGX) shareholders may be a little concerned to see that the Independent Director, John Jeffrey, recently sold a substantial US$2.5m worth of stock at a price of US$540 per share. That's a big disposal, and it decreased their holding size by 28%, which is notable but not too bad.
The Last 12 Months Of Insider Transactions At Argan
The Independent Director, Cynthia Flanders, made the biggest insider sale in the last 12 months. That single transaction was for US$7.3m worth of shares at a price of US$387 each. So it's clear an insider wanted to take some cash off the table, even below the current price of US$572. We generally consider it a negative if insiders have been selling, especially if they did so below the current price, because it implies that they considered a lower price to be reasonable. However, while insider selling is sometimes discouraging, it's only a weak signal. This single sale was just 42% of Cynthia Flanders's stake.
Insiders in Argan didn't buy any shares in the last year. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
Check out our latest analysis for Argan
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Does Argan Boast High 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. Argan insiders own about US$325m worth of shares (which is 4.1% 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.
What Might The Insider Transactions At Argan Tell Us?
Insiders haven't bought Argan stock in the last three months, but there was some selling. And there weren't any purchases to give us comfort, over the last year. But since Argan is profitable and growing, we're not too worried by this. It is good to see high insider ownership, but the insider selling leaves us cautious. While it's good to be aware of what's going on with the insider's ownership and transactions, we make sure to also consider what risks are facing a stock before making any investment decision. In terms of investment risks, we've identified 2 warning signs with Argan and understanding them should be part of your investment process.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting 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 of direct interests only, but not derivative transactions or indirect interests.
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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.