It is not uncommon to see companies perform well in the years after insiders buy shares. 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 we'll take a look at whether insiders have been buying or selling shares in PC Connection, Inc. (NASDAQ:CNXN).
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, most countries require that the company discloses such transactions to the market.
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.'
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PC Connection Insider Transactions Over The Last Year
The Vice Chairman, Joseph Baute, made the biggest insider sale in the last 12 months. That single transaction was for US$964k worth of shares at a price of US$40.29 each. So what is clear is that an insider saw fit to sell at around the current price of US$34.89. While we don't usually like to see insider selling, it's more concerning if the sales take price at a lower price. In this case, the big sale took place at around the current price, so it's not too bad (but it's still not a positive).
We note that in the last year insiders divested 52460 shares for a total of US$2.0m. In the last year PC Connection insiders didn't buy any company stock. You can see the insider transactions (by individuals) over the last year depicted in the chart below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
I will like PC Connection better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
PC Connection Insiders Are Selling The Stock
Over the last three months, we've seen significant insider selling at PC Connection. Specifically, insiders ditched US$1.6m worth of shares in that time, and we didn't record any purchases whatsoever. This may suggest that some insiders think that the shares are not cheap.
Does PC Connection 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. I reckon it's a good sign if insiders own a significant number of shares in the company. PC Connection insiders own about US$34m worth of shares. That equates to 3.7% of the company. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.
What Might The Insider Transactions At PC Connection Tell Us?
Insiders haven't bought PC Connection stock in the last three months, but there was some selling. And there weren't any purchases to give us comfort, over the last year. But since PC Connection is profitable and growing, we're not too worried by this. Insiders own shares, but we're still pretty cautious, given the history of sales. We're in no rush to buy! If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its future.
But note: PC Connection 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.
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