How Many Insiders Sold Acacia Communications, Inc. (NASDAQ:ACIA) Shares?
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It is not uncommon to see companies perform well in the years after insiders buy shares. 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 Acacia Communications, Inc. (NASDAQ:ACIA).
What Is Insider Selling?
Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock on the market. 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 logic dictates you should pay some attention to whether insiders are buying or selling shares. 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’.
View our latest analysis for Acacia Communications
Acacia Communications Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider sale was by Vice President of Engineering Bhupendra Shah for US$467k worth of shares, at about US$41.98 per share. That means that even when the share price was below the current price of US$42.98, an insider wanted to cash in some shares. While their view may have changed since they sold, this isn’t a particularly bullish sign. When an insider sells below the current price, it does tend to make us wonder about the current valuation. We note that the biggest single sale was only 4.8% of Bhupendra Shah’s holding.
Over the last year, we note insiders sold 107.05k shares worth US$4.2m. Over the last year we saw more insider selling of Acacia Communications shares, than buying. The average sell price was around US$39.64. We don’t gain much confidence from insider selling near the recent share price. While some insiders have decided to take some money off the table, we wouldn’t put too much weight on this fact. 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 Acacia Communications better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
Acacia Communications Insiders Are Selling The Stock
The last quarter saw substantial insider selling of Acacia Communications shares. In total, insiders sold US$1.4m 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.
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. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. It’s great to see that Acacia Communications insiders own 8.5% of the company, worth about US$148m. Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.
So What Do The Acacia Communications Insider Transactions Indicate?
Insiders sold Acacia Communications shares recently, but they didn’t buy any. And there weren’t any purchases to give us comfort, over the last year. While insiders do own a lot of shares in the company (which is good), our analysis of their transactions doesn’t make us feel confident about the company. Therefore, you should should definitely take a look at this FREE report showing analyst forecasts for Acacia Communications.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
