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Have Insiders Been Selling Garmin Ltd. (NASDAQ:GRMN) Shares?

Simply Wall St

We often see insiders buying up shares in companies that perform well over the long term. 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 Garmin Ltd. (NASDAQ:GRMN).

What Is Insider Buying?

It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, most countries require that the company discloses such transactions to the market.

We don't think shareholders should simply follow insider transactions. But it is perfectly logical to keep tabs on what insiders are doing. For example, a Harvard University study found that 'insider purchases earn abnormal returns of more than 6% per year.

See our latest analysis for Garmin

The Last 12 Months Of Insider Transactions At Garmin

The Managing Director of EMEA, Sean Biddlecombe, made the biggest insider sale in the last 12 months. That single transaction was for US$125k worth of shares at a price of US$83.51 each. That means that an insider was selling shares at slightly below the current price (US$86.39). When an insider sells below the current price, it suggests that they considered that lower price to be fair. That makes us wonder what they think of the (higher) recent valuation. However, while insider selling is sometimes discouraging, it's only a weak signal. We note that the biggest single sale was only 22% of Sean Biddlecombe's holding. Sean Biddlecombe was the only individual insider to sell over the last year.

Sean Biddlecombe divested 1816 shares over the last 12 months at an average price of US$82.97. You can see a visual depiction of insider transactions (by individuals) over the last 12 months, below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

NasdaqGS:GRMN Recent Insider Trading, October 25th 2019

If you like to buy stocks that insiders are buying, rather than selling, then you might just love this free list of companies. (Hint: insiders have been buying them).

Garmin Insiders Are Selling The Stock

The last three months saw some Garmin insider selling. Managing Director of EMEA Sean Biddlecombe sold just US$25k worth of shares in that time. It's not great to see insider selling, nor the lack of recent buyers. But the amount sold isn't enough for us to put any weight on it.

Insider Ownership of Garmin

Many investors like to check how much of a company is owned by insiders. I reckon it's a good sign if insiders own a significant number of shares in the company. Garmin insiders own 28% of the company, currently worth about US$4.5b based on the recent share price. I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.

So What Do The Garmin Insider Transactions Indicate?

Our data shows a little more insider selling, but no insider buying, in the last three months. But given the selling was modest, we're not worried. It's heartening that insiders own plenty of stock, but we'd like to see more insider buying, since the last year of Garmin insider transactions don't fill us with confidence. 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.

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.

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 editorial-team@simplywallst.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.