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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. The flip side of that is that there are more than a few examples of insiders dumping stock prior to a period of weak performance. So shareholders might well want to know whether insiders have been buying or selling shares in Agilysys, Inc. (NASDAQ:AGYS).
Do Insider Transactions Matter?
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, such insiders must disclose their trading activities, and not trade on inside information.
We don't think shareholders should simply follow insider transactions. 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'.
Agilysys Insider Transactions Over The Last Year
The CEO, President & Director Ramesh Srinivasan made the biggest insider purchase in the last 12 months. That single transaction was for US$178k worth of shares at a price of US$17.81 each. Even though the purchase was made at a significantly lower price than the recent price (US$39.90), we still think insider buying is a positive. Because it occurred at a lower valuation, it doesn't tell us much about whether insiders might find today's price attractive.
Happily, we note that in the last year insiders paid US$293k for 15.81k shares. But they sold 6.08k shares for US$204k. In the last twelve months there was more buying than selling by Agilysys insiders. The chart below shows insider transactions (by companies and 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!
Agilysys is not the only stock that insiders are buying. For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.
Insiders at Agilysys Have Sold Stock Recently
Over the last three months, we've seen a bit of insider selling at Agilysys. VP & Chief Information Officer Robert Jacks divested only US$44k worth of shares in that time. It's not great to see insider selling, nor the lack of recent buyers. But the amount sold isn't enough for us to put any weight on it.
Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. I reckon it's a good sign if insiders own a significant number of shares in the company. Insiders own 3.6% of Agilysys shares, worth about US$34m. 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 Agilysys Insider Transactions Indicate?
Our data shows a little more insider selling, but no insider buying, in the last three months. But given the selling was modest, we're not worried. On a brighter note, the transactions over the last year are encouraging. Insiders do have a stake in Agilysys and their transactions don't cause us concern. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Agilysys. Every company has risks, and we've spotted 1 warning sign for Agilysys you should know about.
But note: Agilysys 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.
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. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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