When insiders buy shares in their own companies, investors should take note. It’s not a stretch to say that these individuals are some of the most informed participants in the market.
In this report, we are going to highlight some interesting insider buying at Alto Ingredients Inc (ALTO:US). Alto Ingredients is a leading manufacturer and supplier of essential ingredients such as industrial and beverage alcohols, premium feed and food products, and renewable fuel. The company is listed on the NASDAQ Capital Market and currently has a market capitalization of $448 million.
Alto Ingredients: Insider Buying
Our data shows that since 17 May, Alto board member Gilbert Nathan has purchased stock on six occasions. In total, the insider has added 124,659 shares to his holding, and spent around $700,000 on stock.
This trading activity from Mr. Nathan stands out for two reasons. Firstly, he has increased his holding by 47%. This significant increase suggests that he is very bullish on the stock.
Secondly, our records show that Mr. Nathan has a good track record when it comes to timing his purchases well. In August last year, the insider bought a large number of shares when the stock was trading near $3.50. Since then, it has nearly doubled in price.
It’s worth noting that Mr. Nathan, who has served as an Advisor to the Board since November 2015 and as a Director since November 2019, is an experienced investor with significant experience in the industries that Alto operates in. Currently, he is Managing Member of financial consulting firm Jackson Square Advisors LLC and is the Chief Executive Officer of Keycon Power Holdings, LLC. Previously, he was a Senior Analyst with Candlewood Investment Group, an investment firm with significant debt and equity investments in the ethanol industry. Before this, he served as Principal at Restoration Capital Management for 10 years. So, he is likely to have a good understanding of Alto’s prospects.
Alto’s recent first-quarter results were solid. While net sales were down nearly 30% year on year at $218.7 million, the company managed to generate a significant increase in profitability. For the quarter, operating income was $5.6 million, compared to an operating loss of $23.1 million in the same period last year while net income available to common stockholders was $4.4 million, or $0.06 per share, compared to a net loss of $25.4 million, or $0.47 per share in Q1 2020.
Looking ahead, management was optimistic in relation to the company’s prospects, stating that the company remains on track with $18 million in capital improvement projects in 2021 that are expected to expand revenue and increase efficiencies.
“Over the past 12 months, we improved operations, reduced controllable expenses and our overall cost of capital, and improved our production footprint. Today, we are reinvesting in quality, proven and high-value projects, building an even better balance sheet and pursuing the last steps in optimizing our West Coast fuel-grade ethanol production. We have a strong foundation to pursue opportunities to enhance and expand our long-term growth,” said CEO Mike Kandris.
In light of this confident tone from management, we see the insider buying here as a bullish indicator.