Should You Take Comfort From Insider Transactions At Aware, Inc. (NASDAQ:AWRE)?
We often see insiders buying up shares in companies that perform well over the long term. The flip side of that is that there are more than a few examples of insiders dumping stock prior to a period of weak performance. So we'll take a look at whether insiders have been buying or selling shares in Aware, Inc. (NASDAQ:AWRE).
Do Insider Transactions Matter?
Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock in the company. However, most countries require that the company discloses such transactions to the market.
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. For example, a Harvard University study found that 'insider purchases earn abnormal returns of more than 6% per year'.
View our latest analysis for Aware
Aware Insider Transactions Over The Last Year
The Independent Director John Stafford made the biggest insider purchase in the last 12 months. That single transaction was for US$115k worth of shares at a price of US$2.69 each. That implies that an insider found the current price of US$2.72 per share to be enticing. Of course they may have changed their mind. But this suggests they are optimistic. We do always like to see insider buying, but it is worth noting if those purchases were made at well below today's share price, as the discount to value may have narrowed with the rising price. The good news for Aware share holders is that insiders were buying at near the current price.
In the last twelve months Aware insiders were buying shares, but not selling. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
Aware is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Aware Insiders Bought Stock Recently
Over the last three months, we've seen a bit of insider buying at Aware. Independent Director John Stafford purchased US$28k worth of shares in that period. We like it when there are only buyers, and no sellers. But the amount invested in the last three months isn't enough for us too put much weight on it, as a single factor.
Insider Ownership
For a common shareholder, it is worth checking how many shares are held by company insiders. I reckon it's a good sign if insiders own a significant number of shares in the company. Aware insiders own about US$16m worth of shares. That equates to 28% of the company. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.
So What Do The Aware Insider Transactions Indicate?
We note a that there has been a bit of insider buying recently (but no selling). The net investment is not enough to encourage us much. But insiders have shown more of an appetite for the stock, over the last year. Overall we don't see anything to make us think Aware insiders are doubting the company, and they do own shares. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. When we did our research, we found 2 warning signs for Aware (1 makes us a bit uncomfortable!) that we believe deserve your full attention.
If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, that have HIGH return on equity 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.
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. 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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