We’ve lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. On the other hand, we’d be remiss not to mention that insider sales have been known to precede tough periods for a business. So we’ll take a look at whether insiders have been buying or selling shares in Flex Ltd. (NASDAQ:FLEX).
What Is Insider Selling?
It’s quite normal to see company insiders, such as board members, trading in company stock, from time to time. However, such insiders must disclose their trading activities, and not trade on inside information.
We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. But logic dictates you should pay some attention to whether insiders are buying or selling shares. 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.’
The Last 12 Months Of Insider Transactions At Flex
In the last twelve months, the biggest single sale by an insider was when Director Michael McNamara sold US$3.5m worth of shares at a price of US$14.50 per share. Although we don’t gain confidence from insider selling, we note that this large sale was at well above current price of US$10.30. So it may not shed much light on insider confidence at current levels.
Over the last year, we can see that insiders have bought 38.53k shares worth US$300k. But they sold 585.11k for US$8.4m. In total, Flex insiders sold more than they bought over the last year. They sold for an average price of about US$14.31. It is certainly not great to see that insiders have sold shares in the company. However, we do note that the average sale price was significantly higher than the current share price (which is US$10.30). You can see the insider transactions (by individuals) over the last year depicted in the chart below. By clicking on the graph below, you can see the precise details of each insider transaction!
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Are Flex Insiders Buying Or Selling?
We have seen a bit of insider selling at Flex, over the last three months. Insiders sold just US$5.9k worth of shares in that time. It’s not great to see insider selling, nor the lack of recent buyers. But the selling simply isn’t sufficiently substantial to be of much use as a signal.
For a common shareholder, it is worth checking how many shares are held by company insiders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Insiders own 0.9% of Flex shares, worth about US$47m. While this is a strong but not outstanding level of insider ownership, it’s enough to indicate some alignment between management and smaller shareholders.
So What Do The Flex Insider Transactions Indicate?
Our data shows a little more insider selling than buying in the last three months. But the difference isn’t enough to have us worried. Recent sales exacerbate our caution arising from analysis of Flex insider transactions. But it’s good to see that insiders own shares in the company. If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its future.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.
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If you spot an error that warrants correction, please contact the editor at email@example.com. 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.