In the last year, many The AZEK Company Inc. (NYSE:AZEK) insiders sold a substantial stake in the company which may have sparked shareholders' attention. When analyzing insider transactions, it is usually more valuable to know whether insiders are buying versus knowing if they are selling, as the latter sends an ambiguous message. However, shareholders should take a deeper look if several insiders are selling stock over a specific time period.

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

AZEK Insider Transactions Over The Last Year

Notably, that recent sale by CEO, President & Director Jesse Singh was not the only time they sold AZEK shares this year. Earlier in the year, they fetched US$47.42 per share in a -US$2.5m sale. While insider selling is a negative, to us, it is more negative if the shares are sold at a lower price. It's of some comfort that this sale was conducted at a price well above the current share price, which is US$42.11. So it may not tell us anything about how insiders feel about the current share price.

All up, insiders sold more shares in AZEK than they bought, over the last year. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

I will like AZEK better if I see some big insider buys. While we wait, check out this free list of undervalued and small cap stocks with considerable, recent, insider buying.

AZEK Insiders Are Selling The Stock

Over the last three months, we've seen notably more insider selling, than insider buying, at AZEK. We note insiders cashed in US$3.9m worth of shares. On the flip side, Independent Director Pamela Edwards spent US$25k on purchasing shares (as mentioned above) . The share price has moved a bit recently, but it's hard to argue that the selling is a positive.

Insider Ownership Of AZEK

Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. We usually like to see fairly high levels of insider ownership. AZEK insiders own about US$115m worth of shares (which is 1.9% 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 Does This Data Suggest About AZEK Insiders?

Unfortunately, there has been more insider selling of AZEK stock, than buying, in the last three months. Zooming out, the longer term picture doesn't give us much comfort. On the plus side, AZEK makes money, and is growing profits. The company boasts high insider ownership, but we're a little hesitant, given the history of share sales. 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 1 warning sign for AZEK you should be aware of.

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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