In the last year, many FormFactor, Inc. (NASDAQ:FORM) insiders sold a substantial stake in the company which may have sparked shareholders' attention. Knowing whether insiders are buying is usually more helpful when evaluating insider transactions, as insider selling can have various explanations. However, when multiple insiders sell stock over a specific duration, shareholders should take notice as that could possibly be a red flag.
While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we would consider it foolish to ignore insider transactions altogether.
View our latest analysis for FormFactor
The Last 12 Months Of Insider Transactions At FormFactor
In fact, the recent sale by Chief Financial Officer Shai Shahar was not their only sale of FormFactor shares this year. They previously made an even bigger sale of -US$887k worth of shares at a price of US$37.53 per share. That means that an insider was selling shares at around the current price of US$37.08. While we don't usually like to see insider selling, it's more concerning if the sales take place at a lower price. Given that the sale took place at around current prices, it makes us a little cautious but is hardly a major concern.
In the last year FormFactor insiders didn't buy any company stock. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
I will like FormFactor better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
FormFactor Insiders Are Selling The Stock
Over the last three months, we've seen significant insider selling at FormFactor. In total, insiders dumped US$1.7m worth of shares in that time, and we didn't record any purchases whatsoever. Overall this makes us a bit cautious, but it's not the be all and end all.
Does FormFactor Boast High Insider Ownership?
Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. We usually like to see fairly high levels of insider ownership. Insiders own 1.0% of FormFactor shares, worth about US$30m. 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 Do The FormFactor Insider Transactions Indicate?
Insiders haven't bought FormFactor stock in the last three months, but there was some selling. 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'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. Every company has risks, and we've spotted 1 warning sign for FormFactor you should know about.
But note: FormFactor 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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