It is not uncommon to see companies perform well in the years after insiders buy shares. On the other hand, we'd be remiss not to mention that insider sales have been known to precede tough periods for a business. So before you buy or sell ADTRAN, Inc. (NASDAQ:ADTN), you may well want to know whether insiders have been buying or selling.
Do Insider Transactions Matter?
It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, rules govern insider transactions, and certain disclosures are required.
Insider transactions are not the most important thing when it comes to long-term investing. But logic dictates you should pay some attention to whether insiders are buying or selling shares. As Peter Lynch said, 'insiders might sell their shares for any number of reasons, but they buy them for only one: they think the price will rise.'
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The Last 12 Months Of Insider Transactions At ADTRAN
The Director Emeritus, Roy Nichols, made the biggest insider sale in the last 12 months. That single transaction was for US$237k worth of shares at a price of US$18.98 each. That means that an insider was selling shares at around the current price of US$15.99. While insider selling is a negative, to us, it is more negative if the shares are sold at a lower price. We note that this sale took place at around the current price, so it isn't a major concern, though it's hardly a good sign.
We note that in the last year insiders divested 21455 shares for a total of US$395k. In the last year ADTRAN insiders didn't buy any company stock. You can see the insider transactions (by 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!
I will like ADTRAN better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
ADTRAN Insiders Are Selling The Stock
The last three months saw significant insider selling at ADTRAN. In total, insiders dumped US$158k 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 ADTRAN
I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with insiders. I reckon it's a good sign if insiders own a significant number of shares in the company. From our data, it seems that ADTRAN insiders own 0.9% of the company, worth about US$6.7m. Overall, this level of ownership isn't that impressive, but it's certainly better than nothing!
What Might The Insider Transactions At ADTRAN Tell Us?
Insiders sold ADTRAN shares recently, but they didn't buy any. And there weren't any purchases to give us comfort, over the last year. When you combine this with the relatively low insider ownership, we are very cautious about the stock. As the saying goes, only fools rush in. Of course, the future is what matters most. So if you are interested in ADTRAN, you should check out this free report on analyst forecasts for the company.
But note: ADTRAN 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.
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If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.