Insiders at Broadcom Inc. (NASDAQ:AVGO) sold US$25m worth of stock at an average price of US$610 a share over the past year, making the most of their investment. After the stock price dropped 3.4% last week, the company's market value declined by US$6.6b, but insiders were able to mitigate their losses.
While insider transactions are not the most important thing when it comes to long-term investing, we would consider it foolish to ignore insider transactions altogether.
The Last 12 Months Of Insider Transactions At Broadcom
Over the last year, we can see that the biggest insider sale was by the insider, Thomas Krause, for US$8.1m worth of shares, at about US$586 per share. We generally don't like to see insider selling, but the lower the sale price, the more it concerns us. It's of some comfort that this sale was conducted at a price well above the current share price, which is US$466. So it is hard to draw any strong conclusion from it.
Over the last year we saw more insider selling of Broadcom 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!
If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.
Insider Ownership Of Broadcom
Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. A high insider ownership often makes company leadership more mindful of shareholder interests. Broadcom insiders own 1.5% of the company, currently worth about US$2.9b based on the recent share price. This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.
So What Do The Broadcom Insider Transactions Indicate?
It doesn't really mean much that no insider has traded Broadcom shares in the last quarter. It's great to see high levels of insider ownership, but looking back over the last year, we don't gain confidence from the Broadcom insiders selling. While we like knowing what's going on with the insider's ownership and transactions, we make sure to also consider what risks are facing a stock before making any investment decision. You'd be interested to know, that we found 1 warning sign for Broadcom and we suggest you have a look.
But note: Broadcom 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, but not derivative transactions.
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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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