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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. 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 shareholders might well want to know whether insiders have been buying or selling shares in Ultra Clean Holdings, Inc. (NASDAQ:UCTT).
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.
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 Ultra Clean Holdings
Over the last year, we can see that the biggest insider purchase was by Chairman of the Board Clarence Granger for US$624k worth of shares, at about US$14.25 per share. That means that even when the share price was higher than US$13.27 (the recent price), an insider wanted to purchase shares. Their view may have changed since then, but at least it shows they felt optimistic at the time. To us, it's very important to consider the price insiders pay for shares is very important. As a general rule, we feel more positive about a stock if insiders have bought shares at above current prices, because that suggests they viewed the stock as good value, even at a higher price.
Happily, we note that in the last year insiders paid US$920k for 66000 shares. But insiders sold 77054 shares worth US$946k. In total, Ultra Clean Holdings insiders sold more than they bought over the last year. 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!
If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.
Ultra Clean Holdings Insiders Bought Stock Recently
There has been significantly more insider buying, than selling, at Ultra Clean Holdings, over the last three months. Clarence Granger spent US$907k on stock. But we did see insider selling worth US$641k. We think insiders may be optimistic about the future, since insiders have been net buyers of shares.
Insider Ownership of Ultra Clean Holdings
Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. We usually like to see fairly high levels of insider ownership. Ultra Clean Holdings insiders own about US$18m worth of shares. That equates to 3.4% of the company. We've certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.
So What Do The Ultra Clean Holdings Insider Transactions Indicate?
It is good to see the recent insider purchase. On the other hand the transaction history, over the last year, isn't so positive. The more recent transactions are a positive, but Ultra Clean Holdings insiders haven't shown the sustained enthusiasm that we look for, although they do own a decent number of shares, overall. Overall they seem reasonably aligned. Therefore, you should should definitely take a look at this FREE report showing analyst forecasts for Ultra Clean Holdings.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.
For the purposes of this article, insiders are those individuals who report their transactions to the relevant regulatory body.
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 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.