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We’ve lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. 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 TransAct Technologies Incorporated (NASDAQ:TACT).
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, 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 equally, we would consider it foolish to ignore insider transactions altogether. 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 TransAct Technologies
Independent Director Graham Tanaka made the biggest insider sale in the last 12 months. That single transaction was for US$340k worth of shares at a price of US$10.62 each. That means that an insider was selling shares at around the current price of US$10.46. They might be selling for a variety of reasons, but it’s hard to argue this is a bullish sign. We usually pause to reflect on the potential that a stock has a high valuation, if insiders have been selling at around the current price.
All up, insiders sold more shares in TransAct Technologies than they bought, over the last year. The sellers received a price of around US$11.28, on average. It’s not particularly great to see insiders were selling shares around current prices. But we don’t put too much weight on the insider selling, since sellers could have personal reasons. The chart below shows insider transactions (by individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!
For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.
TransAct Technologies Insiders Are Selling The Stock
Over the last three months, we’ve seen significant insider selling at TransAct Technologies. In total, Graham Tanaka dumped US$807k 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.
I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with insiders. I reckon it’s a good sign if insiders own a significant number of shares in the company. Based on our data, TransAct Technologies insiders have about 3.8% of the stock, worth approximately US$2.9m. We prefer to see high levels of insider ownership.
So What Do The TransAct Technologies Insider Transactions Indicate?
An insider sold TransAct Technologies shares recently, but they didn’t buy any. Despite some insider buying, the longer term picture doesn’t make us feel much more positive. When you combine this with the relatively low insider ownership, we are very cautious about the stock. As the saying goes, only fools rush in. 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. On rare occasion, data errors may occur. Thank you for reading.