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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 we’ll take a look at whether insiders have been buying or selling shares in Arrow Electronics, Inc. (NYSE:ARW).
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 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’.
Arrow Electronics Insider Transactions Over The Last Year
Chairman Michael Long made the biggest insider sale in the last 12 months. That single transaction was for US$4.2m worth of shares at a price of US$83.26 each. So we know that an insider sold shares at around the present share price of US$75.95. While their view may have changed since the sale, this is not a particularly positive fact. We usually pause to reflect on the potential that a stock has a high valuation, if insiders have been selling at around the current price.
We note that in the last year insiders divested 71.15k shares for a total of US$5.8m. All up, insiders sold more shares in Arrow Electronics than they bought, over the last year. The sellers received a price of around US$81.84, on average. 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. You can see the insider transactions (by individuals) over the last year depicted in the chart below. By clicking on the graph below, you can see the precise details of each insider transaction!
I will like Arrow Electronics better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
Arrow Electronics Insiders Are Selling The Stock
The last three months saw significant insider selling at Arrow Electronics. Specifically, Charles Kostalnick ditched US$52k 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 Arrow Electronics Boast High Insider Ownership?
For a common shareholder, it is worth checking how many shares are held by company insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. Insiders own 0.9% of Arrow Electronics shares, worth about US$57m. While this is a strong but not outstanding level of insider ownership, it’s enough to indicate some alignment between management and smaller shareholders.
So What Does This Data Suggest About Arrow Electronics Insiders?
An insider sold stock recently, but they haven’t been buying. And even if we look to the last year, we didn’t see any purchases. On the plus side, Arrow Electronics makes money, and is growing profits. While insiders do own shares, they don’t own a heap, and they have been selling. We’d think twice before buying! Of course, the future is what matters most. So if you are interested in Arrow Electronics, you should check out this free report on analyst forecasts for the company.
Of course Arrow Electronics may not be the best stock to buy. So you may wish to see this free collection of high quality 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 firstname.lastname@example.org.