Quite a few insiders have dramatically grown their holdings in ProFrac Holding Corp. (NASDAQ:ACDC) over the past 12 months. An insider's optimism about the company's prospects is a positive sign.

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.

ProFrac Holding Insider Transactions Over The Last Year

In the last twelve months, the biggest single purchase by an insider was when insider Farris Wilks bought US$2.3m worth of shares at a price of US$6.93 per share. We do like to see buying, but this purchase was made at well below the current price of US$8.13. Because it occurred at a lower valuation, it doesn't tell us much about whether insiders might find today's price attractive.

ProFrac Holding insiders may have bought shares in the last year, but they didn't sell any. 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!

ProFrac Holding is not the only stock that insiders are buying. For those who like to find small cap companies at attractive valuations, this free list of growing companies with recent insider purchasing, could be just the ticket.

ProFrac Holding Insiders Bought Stock Recently

Over the last quarter, ProFrac Holding insiders have spent a meaningful amount on shares. We can see that Executive Chairman & President Matthew Wilks paid US$426k for shares in the company. No-one sold. This is a positive in our book as it implies some confidence.

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. It appears that ProFrac Holding insiders own 3.3% of the company, worth about US$41m. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.

So What Do The ProFrac Holding Insider Transactions Indicate?

The recent insider purchase is 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. Given that insiders also own a fair bit of ProFrac Holding we think they are probably pretty confident of a bright future. 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.

Of course ProFrac Holding 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.

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.