We often see insiders buying up shares in companies that perform well over the long term. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So shareholders might well want to know whether insiders have been buying or selling shares in Lam Research Corporation (NASDAQ:LRCX).
Do Insider Transactions Matter?
It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, rules govern insider transactions, and certain disclosures are required.
Insider transactions are not the most important thing when it comes to long-term investing. 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.’
The Last 12 Months Of Insider Transactions At Lam Research
Over the last year, we can see that the biggest insider sale was by Senior VP Sarah O’Dowd for US$2.2m worth of shares, at about US$224 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$179. So it may not tell us anything about how insiders feel about the current share price.
Over the last year, we note insiders sold 23.20k shares worth US$4.9m. All up, insiders sold more shares in Lam Research than they bought, over the last year. The sellers received a price of around US$210, on average. It’s not particularly great to see insiders were selling shares around current prices (shares recently traded around US$179). While some insiders have decided to take some money off the table, we wouldn’t put too much weight on this fact. You can see the insider transactions (by individuals) over the last year depicted in the chart below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.
Insiders at Lam Research Have Sold Stock Recently
Over the last three months, we’ve seen significant insider selling at Lam Research. In total, Independent Director Christine Heckart sold US$355k worth of shares in that time, and we didn’t record any purchases whatsoever. Overall this makes us a bit cautious, but it’s not the be all and end all.
Many investors like to check how much of a company is owned by insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. Lam Research insiders own about US$132m worth of shares (which is 0.5% of the company). Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.
So What Does This Data Suggest About Lam Research Insiders?
An insider sold stock recently, but they haven’t been buying. And even if we look to the last year, we didn’t see any purchases. On the plus side, Lam Research makes money, and is growing profits. It is good to see high insider ownership, but the insider selling leaves us cautious. Therefore, you should should definitely take a look at this FREE report showing analyst forecasts for Lam Research.
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 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.