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It is not uncommon to see companies perform well in the years after insiders buy shares. 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 before you buy or sell Immersion Corporation (NASDAQ:IMMR), you may well want to know whether insiders have been buying or selling.
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 on the market. However, rules govern insider transactions, and certain disclosures are required.
We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. But it is perfectly logical to keep tabs on what insiders are doing. 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.'
Immersion Insider Transactions Over The Last Year
The Director, David Sugishita, made the biggest insider sale in the last 12 months. That single transaction was for US$396k worth of shares at a price of US$9.62 each. While insider selling is a negative, to us, it is more negative if the shares are sold at a lower price. It's of some comfort that this sale was conducted at a price well above the current share price, which is US$7.45. So it may not shed much light on insider confidence at current levels. David Sugishita was the only individual insider to sell shares in the last twelve months.
Over the last year, we can see that insiders have bought 16000 shares worth US$147k. On the other hand they divested 41334 shares, for US$396k. The chart below shows insider transactions (by individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!
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 Immersion
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Our data suggests Immersion insiders own 1.4% of the company, worth about US$3.2m. We consider this fairly low insider ownership.
What Might The Insider Transactions At Immersion Tell Us?
It doesn't really mean much that no insider has traded Immersion shares in the last quarter. We don't take much encouragement from the transactions by Immersion insiders. And usually insiders own more stock in the company, according to our data. Of course, the future is what matters most. So if you are interested in Immersion, you should check out this free report on analyst forecasts for the company.
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 aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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.