Shares of Forgent Power Solutions (FPS -0.54%) took a beating this week, falling 17% through 2 p.m. ET Friday.
Forgent is an artificial intelligence (AI) pick-and-shovel play that supplies data centers with critical electrical hardware like switchgear, transformers, and automatic transfer switches. The company went public in February 2026, and business is booming, with backlog almost touching $2 billion n the latest quarter.
So why is the stock plummeting? It all comes down to heavy insider selling, but it's not what you think.
Image source: Getty Images.
Why are insiders selling Forgent shares?
Neos Partners, the private equity (PE) firm that formed Forgent by combining four legacy equipment makers and took it public in February, has been selling its stake. Those multiple stock offerings since the initial public offering (IPO) have kept investors on edge.
On top of that, the standard IPO lockup period expired on Aug. 4, allowing early institutional investors and company insiders, who were legally restricted from trading since the IPO, to liquidate their holdings for whatever reason.
NYSE: FPS
Key Data Points
The market is missing the big point. PE firms aren't long-term operators and typically cash out after IPOs and unwind positions to cede control of the company. While that creates a temporary overhang on the stock price, it is actually a long-term positive for Forgent.
Is Forgent stock a buy now?
None of those share sales reflects where Forgent's business is going.
While several companies make electrical equipment, Forgent builds specialized, engineered-to-order systems in some of the shortest lead times in the industry. That's a massive durable edge, and the reason Forgent stock should deliver once the Neos overhang fades.
