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 Spectra7 Microsystems Inc. (TSE:SEV).
What Is Insider Selling?
It is perfectly legal for company insiders, including board members, to buy and sell stock in a 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 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’.
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The Last 12 Months Of Insider Transactions At Spectra7 Microsystems
Over the last year, we can see that the biggest insider purchase was by Independent Director John Vettese for CA$132k worth of shares, at about CA$0.10 per share. That means that an insider was happy to buy shares at around the current price. Of course they may have changed their mind. But this suggests they are optimistic. Nonetheless, we consider it positive if insiders want to buy at around the current share price. The only individual insider to buy over the last year was John Vettese.
All up, insiders sold more shares in Spectra7 Microsystems than they bought, over the last year. The sellers received a price of around US$0.097, on average. It’s not too encouraging to see that insiders have sold at below the current price. But we wouldn’t put too much weight on the insider selling. The chart below shows insider transactions (by individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!
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Spectra7 Microsystems Insiders Are Selling The Stock
Over the last three months, we’ve seen significant insider selling at Spectra7 Microsystems. In total, insiders sold US$178k 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.
Does Spectra7 Microsystems Boast High Insider Ownership?
I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with insiders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. From looking at our data, insiders own CA$1.1m worth of Spectra7 Microsystems stock, about 4.2% of the company. We consider this fairly low insider ownership.
What Might The Insider Transactions At Spectra7 Microsystems Tell Us?
Insiders haven’t bought Spectra7 Microsystems stock in the last three months, but there was some selling. Despite some insider buying, the longer term picture doesn’t make us feel much more positive. Insiders own relatively few shares in the company, and when you consider the sales, we’re not particularly excited 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 Spectra7 Microsystems, you should check out this free report on analyst forecasts for the company.
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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 email@example.com.