Napco Security Technologies, Inc.'s (NASDAQ:NSSC) stock rose 25% last week, but insiders who sold US$76m worth of stock over the last year are probably in a more advantageous position. Selling at an average price of US$31.49, which is higher than the current price, may have been the wisest decision for these insiders as their investment would have been worth less now than when they sold.
While insider transactions are not the most important thing when it comes to long-term investing, logic dictates you should pay some attention to whether insiders are buying or selling shares.
Napco Security Technologies Insider Transactions Over The Last Year
In the last twelve months, the biggest single sale by an insider was when the Founder, Richard Soloway, sold US$72m worth of shares at a price of US$31.50 per share. That means that an insider was selling shares at slightly below the current price (US$43.43). We generally consider it a negative if insiders have been selling, especially if they did so below the current price, because it implies that they considered a lower price to be reasonable. However, while insider selling is sometimes discouraging, it's only a weak signal. It is worth noting that this sale was only 38% of Richard Soloway's holding.
Napco Security Technologies insiders didn't buy any shares over the last year. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. By clicking on the graph below, you can see the precise details of each insider transaction!
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Napco Security Technologies Insiders Are Selling The Stock
The last three months saw significant insider selling at Napco Security Technologies. Specifically, Independent Director Paul Beeber ditched US$255k worth of shares in that time, and we didn't record any purchases whatsoever. This may suggest that some insiders think that the shares are not cheap.
Insider Ownership Of Napco Security Technologies
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. It's great to see that Napco Security Technologies insiders own 11% of the company, worth about US$170m. Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.
What Might The Insider Transactions At Napco Security Technologies Tell Us?
An insider hasn't bought Napco Security Technologies 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. But since Napco Security Technologies is profitable and growing, we're not too worried by this. It is good to see high insider ownership, but the insider selling leaves us cautious. So while it's helpful to know what insiders are doing in terms of buying or selling, it's also helpful to know the risks that a particular company is facing. You'd be interested to know, that we found 1 warning sign for Napco Security Technologies and we suggest you have a look.
But note: Napco Security Technologies 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.