It is not uncommon to see companies perform well in the years after insiders buy shares. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So we’ll take a look at whether insiders have been buying or selling shares in National Instruments Corporation (NASDAQ:NATI).
Do Insider Transactions Matter?
It’s quite normal to see company insiders, such as board members, trading in company stock, from time to time. However, rules govern insider transactions, and certain disclosures are required.
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.’
National Instruments Insider Transactions Over The Last Year
In the last twelve months, the biggest single sale by an insider was when James Truchard sold US$5.6m worth of shares at a price of US$45.21 per share. That means that an insider was selling shares at around the current price of US$44.58. They could have a variety of motivations for selling, but it’s still not particularly encouraging to see. We generally tread carefully if insiders have been selling on market, even if they sold slightly above the current price.
All up, insiders sold more shares in National Instruments than they bought, over the last year. The sellers received a price of around US$45.75, on average. It’s not particularly great to see insiders were selling shares around current prices. While some insiders have decided to take some money off the table, we wouldn’t put too much weight on this fact. The chart below shows insider transactions over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
I will like National Instruments better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
National Instruments Insiders Are Selling The Stock
Over the last three months, we’ve seen significant insider selling at National Instruments. In total, insiders dumped US$395k worth of shares in that time, and we didn’t record any purchases whatsoever. This may suggest that some insiders think that the shares are not cheap.
Insider Ownership of National Instruments
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. I reckon it’s a good sign if insiders own a significant number of shares in the company. It’s great to see that National Instruments insiders own 14% of the company, worth about US$811m. 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 Does This Data Suggest About National Instruments Insiders?
Insiders sold National Instruments shares recently, but they didn’t buy any. Zooming out, the longer term picture doesn’t give us much comfort. It is good to see high insider ownership, but the insider selling leaves us cautious. Of course, the future is what matters most. So if you are interested in National Instruments, you should check out this free report on analyst forecasts for the company.
Of course National Instruments may not be the best stock to buy. So you may wish to see this free collection of high quality companies.
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The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at firstname.lastname@example.org.