Insiders were net sellers of Ecovyst Inc.'s (NYSE:ECVT ) stock during the past year. That is, insiders sold more stock than they bought.    

Although we don't think shareholders should simply follow insider transactions,  we would consider it foolish to ignore insider transactions altogether.

The Last 12 Months Of Insider Transactions At Ecovyst

The Independent Director, Susan Ward, made the biggest insider sale in the last 12 months. That single transaction was for US$251k worth of shares at a price of US$10.28 each.    That means that even when the share price was  slightly  below the current price of US$10.45, an insider wanted to cash in some shares.  When an insider sells below the current price, it suggests that they considered that lower price to be fair. That makes us wonder what they think of the (higher) recent valuation.  While insider selling is not a positive sign, we can't be sure if it does mean insiders think the shares are fully valued, so it's only a weak sign.   It is worth noting that this sale was only 27% of Susan Ward's holding.      Susan Ward was the only individual insider to sell shares in the last twelve months.  

In the last twelve months insiders purchased 8.10k shares for US$78k.  But insiders sold 24.44k shares worth US$251k.   The chart below shows insider transactions (by companies and individuals) over the last year.  By clicking on the graph below, you can see the precise details of each insider transaction!

NYSE:ECVT Insider Trading Volume April 11th 2024

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Ecovyst Insiders Are Selling The Stock  

Over the last three months, we've seen significant insider selling at Ecovyst.  In total,   Independent Director  Susan Ward  sold US$251k worth of shares in that time, and we didn't record any purchases whatsoever.  Overall this makes us a bit cautious, but it's not the be all and end all.  

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.  Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term.   It appears that Ecovyst insiders own 3.4% of the company, worth about US$43m.  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 Do The Ecovyst Insider Transactions Indicate?

An insider  sold stock recently, but they haven't been buying.     Despite some insider buying, the longer term picture doesn't make us feel much more positive.    But since Ecovyst is profitable and growing, we're not too worried by this.    While insiders do own shares, they don't own a heap, and they have been selling.  We're in no rush to buy!      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.    At Simply Wall St, we've found that Ecovyst has 2 warning signs (1 makes us a bit uncomfortable!) that deserve your attention before going any further with your analysis.  

Of course Ecovyst 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 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.