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 we'll take a look at whether insiders have been buying or selling shares in Lantronix, Inc. (NASDAQ:LTRX).
What Is Insider Buying?
Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock in the 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. 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.
Lantronix Insider Transactions Over The Last Year
In the last twelve months, the biggest single sale by an insider was when the Independent Director, Paul Folino, sold US$138k worth of shares at a price of US$2.70 per share. That means that even when the share price was below the current price of US$3.65, an insider wanted to cash in some shares. When an insider sells below the current price, it suggests that they considered that lower price to be fair. That makes us wonder what they think of the (higher) recent valuation. While insider selling is not a positive sign, we can't be sure if it does mean insiders think the shares are fully valued, so it's only a weak sign. This single sale was just 46% of Paul Folino's stake. Paul Folino was the only individual insider to sell over the last year.
Paul Folino divested 75000 shares over the last 12 months at an average price of US$2.63. The chart below shows insider transactions (by individuals) over the last year. 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.
Does Lantronix Boast High Insider Ownership?
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. Our data suggests Lantronix insiders own 2.6% of the company, worth about US$2.2m. I generally like to see higher levels of ownership.
So What Do The Lantronix Insider Transactions Indicate?
It doesn't really mean much that no insider has traded Lantronix shares in the last quarter. We don't take much encouragement from the transactions by Lantronix insiders. And usually insiders own more stock in the company, according to our data. Of course, the future is what matters most. So if you are interested in Lantronix, you should check out this free report on analyst forecasts for the company.
But note: Lantronix may not be the best stock to buy. So take a peek at this free list of interesting companies with high ROE and low debt.
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.
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.