In the last year, many Applied Optoelectronics, Inc. (NASDAQ:AAOI) insiders sold a substantial stake in the company which may have sparked shareholders' attention. When analyzing insider transactions, it is usually more valuable to know whether insiders are buying versus knowing if they are selling, as the latter sends an ambiguous message. However, shareholders should take a deeper look if several insiders are selling stock over a specific time period.
While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we do think it is perfectly logical to keep tabs on what insiders are doing.
See our latest analysis for Applied Optoelectronics
The Last 12 Months Of Insider Transactions At Applied Optoelectronics
Over the last year, we can see that the biggest insider sale was by the CFO & Chief Strategy Officer, Stefan Murry, for US$709k worth of shares, at about US$11.82 per share. That means that even when the share price was below the current price of US$13.04, an insider wanted to cash in some shares. 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. Please do note, however, that sellers may have a variety of reasons for selling, so we don't know for sure what they think of the stock price. We note that the biggest single sale was 69% of Stefan Murry's holding.
Over the last year we saw more insider selling of Applied Optoelectronics 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!
For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.
Applied Optoelectronics Insiders Bought Stock Recently
Over the last quarter, Applied Optoelectronics insiders have spent a meaningful amount on shares. Founder Chih-Hsiang Lin spent US$221k on stock, and there wasn't any selling. This could be interpreted as suggesting a positive outlook.
Insider Ownership
Many investors like to check how much of a company is owned by insiders. I reckon it's a good sign if insiders own a significant number of shares in the company. Applied Optoelectronics insiders own about US$21m worth of shares. That equates to 4.6% of the company. We've certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.
So What Do The Applied Optoelectronics Insider Transactions Indicate?
The recent insider purchase is heartening. On the other hand the transaction history, over the last year, isn't so positive. We don't take much heart from transactions by Applied Optoelectronics insiders over the last year. But they own a reasonable amount of the company, and there was some buying recently. So they seem pretty well aligned, overall. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Applied Optoelectronics. Every company has risks, and we've spotted 3 warning signs for Applied Optoelectronics you should know about.
But note: Applied Optoelectronics 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.