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Insiders who bought US$100k worth of ADTRAN, Inc. (NASDAQ:ADTN) stock in the last year recovered part of their losses as the stock rose by 9.2% last week. However, total losses seen by insiders are still US$4.1k but in since the time of purchase.
While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we would consider it foolish to ignore insider transactions altogether.
ADTRAN Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider purchase was by Independent Director Balan Nair for US$100k worth of shares, at about US$20.95 per share. So it's clear an insider wanted to buy, even at a higher price than the current share price (being US$20.10). It's very possible they regret the purchase, but it's more likely they are bullish about the company. In our view, the price an insider pays for shares is very important. As a general rule, we feel more positive about a stock when an insider has bought shares at above current prices, because that suggests they viewed the stock as good value, even at a higher price. Balan Nair was the only individual insider to buy during the last year.
The chart below shows insider transactions (by companies and individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of growing companies that insiders are buying.
Insiders at ADTRAN Have Bought Stock Recently
At ADTRAN,over the last quarter, we have observed quite a lot more insider buying than insider selling. We can see that Independent Director Balan Nair paid US$100k for shares in the company. But Chief Information Officer Raymond Harris sold shares worth US$48k. The buying outweighs the selling, which suggests that insiders may believe the company will do well in the future.
Does ADTRAN Boast High Insider Ownership?
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. A high insider ownership often makes company leadership more mindful of shareholder interests. Insiders own 1.1% of ADTRAN shares, worth about US$11m. 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 ADTRAN Insider Transactions Indicate?
It is good to see the recent insider purchase. And the longer term insider transactions also give us confidence. However, we note that the company didn't make a profit over the last twelve months, which makes us cautious. Insiders likely see value in ADTRAN shares, given these transactions (along with notable insider ownership of the company). 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. In terms of investment risks, we've identified 2 warning signs with ADTRAN and understanding them should be part of your investment process.
Of course ADTRAN may not be the best stock to buy. So you may wish to see this free collection of high quality companies.
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.