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Possible Bearish Signals With Allegro MicroSystems Insiders Disposing Stock

Simply Wall St ·  12/06/2023 20:45

The fact that multiple Allegro MicroSystems, Inc. (NASDAQ:ALGM) insiders offloaded a considerable amount of shares over the past year could have raised some eyebrows amongst investors. 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 insider transactions are not the most important thing when it comes to long-term investing, we do think it is perfectly logical to keep tabs on what insiders are doing.

See our latest analysis for Allegro MicroSystems

Allegro MicroSystems Insider Transactions Over The Last Year

Over the last year, we can see that the biggest insider sale was by the Independent Director, Joseph Martin, for US$658k worth of shares, at about US$38.73 per share. We generally don't like to see insider selling, but the lower the sale price, the more it concerns us. The good news is that this large sale was at well above current price of US$26.60. So it is hard to draw any strong conclusion from it.

In the last twelve months insiders purchased 8.08k shares for US$291k. On the other hand they divested 23.00k shares, for US$914k. In total, Allegro MicroSystems insiders sold more than they bought over the last year. The chart below shows insider transactions (by companies and individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

insider-trading-volume
NasdaqGS:ALGM Insider Trading Volume December 6th 2023

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Allegro MicroSystems Insiders Bought Stock Recently

Over the last quarter, Allegro MicroSystems insiders have spent a meaningful amount on shares. Not only was there no selling that we can see, but they collectively bought US$87k worth of shares. This is a positive in our book as it implies some confidence.

Does Allegro MicroSystems 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. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Insiders own 1.8% of Allegro MicroSystems shares, worth about US$97m. 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 Allegro MicroSystems Insider Transactions Indicate?

The recent insider purchases are heartening. However, the longer term transactions are not so encouraging. We don't take much heart from transactions by Allegro MicroSystems 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 Allegro MicroSystems. While conducting our analysis, we found that Allegro MicroSystems has 1 warning sign and it would be unwise to ignore it.

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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.

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