Usually, when one insider buys stock, it might not be a monumental event. But when multiple insiders are buying like they did in the case of Advantage Solutions Inc. (NASDAQ:ADV), that sends out a positive message to the company's shareholders.

Although we don't think shareholders should simply follow insider transactions, we do think it is perfectly logical to keep tabs on what insiders are doing.

The Last 12 Months Of Insider Transactions At Advantage Solutions

In the last twelve months, the biggest single purchase by an insider was when Independent Director Brian Ratzan bought US$439k worth of shares at a price of US$2.09 per share. Although we like to see insider buying, we note that this large purchase was at significantly below the recent price of US$3.76. While it does suggest insiders consider the stock undervalued at lower prices, this transaction doesn't tell us much about what they think of current prices.

Advantage Solutions insiders may have bought shares in the last year, but they didn't sell any. They paid about US$2.31 on average. It is certainly positive to see that insiders have invested their own money in the company. However, you should keep in mind that they bought when the share price was meaningfully below today's levels. 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!

Advantage Solutions is not the only stock insiders are buying. So take a peek at this free list of under-the-radar companies with insider buying.

Insiders At Advantage Solutions Have Bought Stock Recently

Over the last quarter, Advantage Solutions insiders have spent a meaningful amount on shares. We can see that CEO & Director David Peacock paid US$112k for shares in the company. No-one sold. This is a positive in our book as it implies some confidence.

Does Advantage Solutions Boast High 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. Advantage Solutions insiders own about US$24m worth of shares. That equates to 2.0% of the company. 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 Does This Data Suggest About Advantage Solutions Insiders?

The recent insider purchase is heartening. We also take confidence from the longer term picture of insider transactions. But we don't feel the same about the fact the company is making losses. Insiders likely see value in Advantage Solutions shares, given these transactions (along with notable insider ownership of the company). 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. Every company has risks, and we've spotted 1 warning sign for Advantage Solutions you should know about.

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.

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