Insiders who bought Kennametal Inc. (NYSE:KMT) stock in the last 12 months were richly rewarded last week. The company's market value increased by US$122m as a result of the stock's 5.8% gain over the same period. Put another way, the original US$962k acquisition is now worth US$1.0m.

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 Kennametal

The Last 12 Months Of Insider Transactions At Kennametal

In the last twelve months, the biggest single purchase by an insider was when Independent Director William Lambert bought US$962k worth of shares at a price of US$26.23 per share. That means that an insider was happy to buy shares at around the current price of US$27.58. 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 Kennametal share holders is that an insider was buying at near the current price. The only individual insider to buy over the last year was William Lambert.

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!

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).

Kennametal Insiders Are Selling The Stock

We have seen a bit of insider selling at Kennametal, over the last three months. VP of Finance & Corporate Controller John Witt sold just US$45k worth of shares in that time. It's not great to see insider selling, nor the lack of recent buyers. But the amount sold isn't enough for us to put any weight on it.

Insider Ownership

I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with insiders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Kennametal insiders own about US$18m worth of shares. That equates to 0.8% of the company. We've certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.

So What Do The Kennametal Insider Transactions Indicate?

We did not see any insider buying in the last three months, but we did see selling. But given the selling was modest, we're not worried. However, our analysis of transactions over the last year is heartening. Insiders own shares in Kennametal and we see no evidence to suggest they are worried about the future. While we like knowing 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. For example - Kennametal has 2 warning signs we think you should be aware of.

But note: Kennametal 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.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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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