We wouldn't blame Cactus, Inc. (NYSE:WHD) shareholders if they were a little worried about the fact that Scott Bender, the CEO & Chairman of the Board recently netted about US$732k selling shares at an average price of US$55.07. However, that sale only accounted for 6.0% of their holding, so arguably it doesn't say much about their conviction.

The Last 12 Months Of Insider Transactions At Cactus

Notably, that recent sale by CEO & Chairman of the Board Scott Bender was not the only time they sold Cactus shares this year. They previously made an even bigger sale of -US$6.8m worth of shares at a price of US$50.01 per share. That means that an insider was selling shares at slightly below the current price (US$62.00). As a general rule we consider it to be discouraging when insiders are selling below the current price, because it suggests they were happy with a lower valuation. However, while insider selling is sometimes discouraging, it's only a weak signal. We note that the biggest single sale was 56% of Scott Bender's holding.

In the last year Cactus insiders didn't buy any company stock. The chart below shows insider transactions (by companies and individuals) over the last year. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

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Insider Ownership

For a common shareholder, it is worth checking how many shares are held by company 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. Cactus insiders own about US$36m worth of shares. That equates to 0.9% 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 Cactus Insiders?

Insiders sold Cactus shares recently, but they didn't buy any. And there weren't any purchases to give us comfort, over the last year. While insiders do own shares, they don't own a heap, and they have been selling. We'd practice some caution before buying! 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. In terms of investment risks, we've identified 2 warning signs with Cactus and understanding these should be part of your investment process.

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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.