In the last year, many Aehr Test Systems (NASDAQ:AEHR) insiders sold a substantial stake in the company which may have sparked shareholders' attention. When evaluating insider transactions, knowing whether insiders are buying versus if they selling is usually more beneficial, as the latter can be open to many interpretations. However, if numerous insiders are selling, shareholders should investigate more.
While insider transactions are not the most important thing when it comes to long-term investing, we would consider it foolish to ignore insider transactions altogether.
See our latest analysis for Aehr Test Systems
The Last 12 Months Of Insider Transactions At Aehr Test Systems
The President, Gayn Erickson, made the biggest insider sale in the last 12 months. That single transaction was for US$6.3m worth of shares at a price of US$51.29 each. While we don't usually like to see insider selling, it's more concerning if the sales take place at a lower price. It's of some comfort that this sale was conducted at a price well above the current share price, which is US$37.31. So it may not shed much light on insider confidence at current levels.
Over the last year we saw more insider selling of Aehr Test Systems shares, than buying. 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!
If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.
Insiders At Aehr Test Systems Have Sold Stock Recently
There was substantially more insider selling, than buying, of Aehr Test Systems shares over the last three months. In total, insiders sold US$11m worth of shares in that time. On the other hand we note Independent Director Howard Slayen bought US$28k worth of shares , as previously mentioned . The share price has moved a bit recently, but it's hard to argue that the selling is a positive.
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. I reckon it's a good sign if insiders own a significant number of shares in the company. It appears that Aehr Test Systems insiders own 5.3% of the company, worth about US$57m. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.
What Might The Insider Transactions At Aehr Test Systems Tell Us?
Unfortunately, there has been more insider selling of Aehr Test Systems stock, than buying, in the last three months. Zooming out, the longer term picture doesn't give us much comfort. But since Aehr Test Systems is profitable and growing, we're not too worried by this. Insider ownership isn't particularly high, so this analysis makes us cautious about the company. We're in no rush to buy! So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. At Simply Wall St, we've found that Aehr Test Systems has 4 warning signs (1 is potentially serious!) that deserve your attention before going any further with your analysis.
But note: Aehr Test Systems may not be the best stock to buy. So take a peek at this free list of interesting companies with high ROE and low debt.
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.