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We often see insiders buying up shares in companies that perform well over the long term. 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 before you buy or sell NV5 Global, Inc. (NASDAQ:NVEE), you may well want to know whether insiders have been buying or selling.
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, such insiders must disclose their trading activities, and not trade on inside information.
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'.
NV5 Global Insider Transactions Over The Last Year
The Chairman & CEO, Dickerson Wright, made the biggest insider sale in the last 12 months. That single transaction was for US$15m worth of shares at a price of US$79.00 each. So it's clear an insider wanted to take some cash off the table, even below the current price of US$82.26. As a general rule we consider it to be discouraging when insiders are selling below the current price, because it suggests they were happy with a lower 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. We note that the biggest single sale was only 8.7% of Dickerson Wright's holding.
In the last twelve months insiders netted US$19m for 251k shares sold. NV5 Global insiders didn't buy any shares over the last year. You can see the insider transactions (by individuals) over the last year depicted in the chart below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
I will like NV5 Global better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
NV5 Global Insiders Are Selling The Stock
Over the last three months, we've seen significant insider selling at NV5 Global. In total, insiders sold US$3.4m 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.
Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. We usually like to see fairly high levels of insider ownership. It's great to see that NV5 Global insiders own 19% of the company, worth about US$197m. This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.
So What Does This Data Suggest About NV5 Global Insiders?
Insiders sold NV5 Global 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 NV5 Global.
But note: NV5 Global 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.
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