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 Digi International Inc. (NASDAQ:DGII).
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.
We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. But equally, we would consider it foolish to ignore insider transactions altogether. For example, a Columbia University study found that 'insiders are more likely to engage in open market purchases of their own company’s stock when the firm is about to reveal new agreements with customers and suppliers'.
Digi International Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider sale was by the Vice President of Manufacturing Operations, Jon Nyland, for US$354k worth of shares, at about US$13.44 per share. That means that an insider was selling shares at around the current price of US$12.78. We generally don't like to see insider selling, but the lower the sale price, the more it concerns us. Given that the sale took place at around current prices, it makes us a little cautious but is hardly a major concern.
Over the last year, we note insiders sold 36130 shares worth US$472k. Insiders in Digi International didn't buy any shares in the last year. The chart below shows insider transactions (by individuals) 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 Digi International better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
Digi International Insiders Are Selling The Stock
The last three months saw significant insider selling at Digi International. In total, insiders dumped US$118k worth of shares in that time, and we didn't record any purchases whatsoever. In light of this it's hard to argue that all the insiders think that the shares are a bargain.
Does Digi International Boast High Insider Ownership?
Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. A high insider ownership often makes company leadership more mindful of shareholder interests. Our data indicates that Digi International insiders own about US$8.8m worth of shares (which is 2.5% of the company). We do generally prefer see higher levels of insider ownership.
So What Does This Data Suggest About Digi International Insiders?
Insiders haven't bought Digi International stock in the last three months, but there was some selling. And there weren't any purchases to give us comfort, over the last year. On the plus side, Digi International makes money, and is growing profits. When you combine this with the relatively low insider ownership, we are very cautious about the stock. So we're not rushing to buy, to say the least. Of course, the future is what matters most. So if you are interested in Digi International, you should check out this free report on analyst forecasts for the company.
Of course Digi International may not be the best stock to buy. So you may wish to see this free collection of high quality companies.
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.
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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. Thank you for reading.