The recent 14% drop in Westrock Coffee Company's (NASDAQ:WEST) stock could come as a blow to insiders who purchased US$925.1k worth of stock at an average buy price of US$7.99 over the past 12 months. Insiders purchase with the hope of seeing their investments increase in value over time. However, due to recent losses, their initial investment is now only worth US$801.5k, which is not great.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, logic dictates you should pay some attention to whether insiders are buying or selling shares.

Westrock Coffee Insider Transactions Over The Last Year

In fact, the recent purchase by Kenneth Parent was the biggest purchase of Westrock Coffee shares made by an insider individual in the last twelve months, according to our records. That means that even when the share price was higher than US$6.92 (the recent price), an insider wanted to purchase shares. It's very possible they regret the purchase, but it's more likely they are bullish about the company. We always take careful note of the price insiders pay when purchasing shares. Generally speaking, it catches our eye when insiders have purchased shares at above current prices, as it suggests they believed the shares were worth buying, even at a higher price.

In the last twelve months insiders purchased 115.83k shares for US$925k. But they sold 28.72k shares for US$221k. In the last twelve months there was more buying than selling by Westrock Coffee insiders. 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!

Westrock Coffee 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 Westrock Coffee Have Bought Stock Recently

At Westrock Coffee,over the last quarter, we have observed quite a lot more insider buying than insider selling. In fact, three insiders bought US$783k worth of shares. But we did see insider selling worth US$221k. The buying outweighs the selling, which suggests that insiders may believe the company will do well in the future.

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. We usually like to see fairly high levels of insider ownership. Westrock Coffee insiders own about US$110m worth of shares (which is 16% of the company). This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.

So What Does This Data Suggest About Westrock Coffee Insiders?

The recent insider purchases are heartening. We also take confidence from the longer term picture of insider transactions. However, we note that the company didn't make a profit over the last twelve months, which makes us cautious. When combined with notable insider ownership, these factors suggest Westrock Coffee insiders are well aligned, and quite possibly think the share price is too low. That's what I like to see! 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. For instance, we've identified 2 warning signs for Westrock Coffee (1 shouldn't be ignored) you should be aware of.

Of course Westrock Coffee 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.