Generally, when a single insider buys stock, it is usually not a big deal. However, when several insiders are buying, like in the case of ARC Document Solutions, Inc. (NYSE:ARC), it sends a favourable message to the company's shareholders.
Although we don't think shareholders should simply follow insider transactions, logic dictates you should pay some attention to whether insiders are buying or selling shares.
The Last 12 Months Of Insider Transactions At ARC Document Solutions
Over the last year, we can see that the biggest insider sale was by the Chief Technology Officer, Rahul Roy, for US$147k worth of shares, at about US$2.70 per share. So it's clear an insider wanted to take some cash off the table, even below the current price of US$3.09. As a general rule we consider it to be discouraging when insiders are selling below the current price, because it suggests they were happy with a lower valuation. Please do note, however, that sellers may have a variety of reasons for selling, so we don't know for sure what they think of the stock price. We note that the biggest single sale was only 12% of Rahul Roy's holding. Rahul Roy was the only individual insider to sell shares in the last twelve months.
In the last twelve months insiders purchased 51.00k shares for US$156k. But insiders sold 54.46k shares worth US$147k. In total, ARC Document Solutions insiders bought more than they sold over the last year. 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!
There are always plenty of stocks that insiders are buying. So if that suits your style you could check each stock one by one or you could take a look at this free list of companies. (Hint: insiders have been buying them).
Insiders At ARC Document Solutions Have Bought Stock Recently
Over the last three months, we've seen significant insider buying at ARC Document Solutions. Specifically, Lead Independent Director Bradford Brooks bought US$54k worth of shares in that time, and we didn't record any sales whatsoever. This makes one think the business has some good points.
Insider Ownership Of ARC Document Solutions
Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. We usually like to see fairly high levels of insider ownership. Insiders own 15% of ARC Document Solutions shares, worth about US$20m. 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 Does This Data Suggest About ARC Document Solutions Insiders?
It's certainly positive to see the recent insider purchase. And the longer term insider transactions also give us confidence. When combined with notable insider ownership, these factors suggest ARC Document Solutions insiders are well aligned, and that they may think the share price is too low. 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. For example - ARC Document Solutions has 1 warning sign we think you should be aware of.
But note: ARC Document Solutions 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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