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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 shareholders might well want to know whether insiders have been buying or selling shares in NVE Corporation (NASDAQ:NVEC).
What Is Insider Buying?
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.
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. For example, a Harvard University study found that ‘insider purchases earn abnormal returns of more than 6% per year.’
The Last 12 Months Of Insider Transactions At NVE
CFO, Treasurer & Secretary Curt Reynders made the biggest insider sale in the last 12 months. That single transaction was for US$197k worth of shares at a price of US$95.15 each. So it’s clear an insider wanted to take some cash off the table, even below the current price of US$97.60. While sellers have a variety of reasons for selling, this isn’t particularly great to see. We generally consider it a negative if insiders have been selling on market, especially if they did so below the current price. It is worth noting that this sale was only 27.4% of Curt Reynders’s holding. The only individual insider seller over the last year was Curt Reynders.
Curt Reynders sold a total of 3.50k shares over the year at an average price of US$105. You can see a visual depiction of insider transactions (by individuals) over the last 12 months, below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).
Insider Ownership of NVE
Many investors like to check how much of a company is owned by insiders. We usually like to see fairly high levels of insider ownership. Our data indicates that NVE insiders own about US$8.8m worth of shares (which is 1.9% of the company). Whilst better than nothing, we’re not overly impressed by these holdings.
So What Does This Data Suggest About NVE 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. But it is good to see that NVE is growing earnings. 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. To put this in context, take a look at how a company has performed in the past. You can access this detailed graph of past earnings, revenue and cash flow .
Of course NVE 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 email@example.com.