Semtech Corporation (NASDAQ:SMTC) Insiders Have Been Selling
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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 Semtech Corporation (NASDAQ:SMTC).
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.
We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. 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.’
Check out our latest analysis for Semtech
Semtech Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider sale was by President Mohan Maheswaran for US$7.5m worth of shares, at about US$50.72 per share. That means that an insider was selling shares at slightly below the current price (US$56.09). While their view may have changed since they sold, this isn’t a particularly bullish sign. As a general rule we consider it to be discouraging when insiders are selling below the current price. Please note, however, that this single sale was 65.4% of Mohan Maheswaran’s stake.
We note that in the last year insiders divested 248.69k shares for a total of US$12m. All up, insiders sold more shares in Semtech than they bought, over the last year. The average sell price was around US$48.66. We don’t gain much confidence from insider selling near the recent share price. But we don’t put too much weight on the insider selling, since sellers could have personal reasons. 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 Semtech better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
Insiders at Semtech Have Sold Stock Recently
The last quarter saw substantial insider selling of Semtech shares. In total, insiders sold US$1.3m 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.
Insider Ownership of Semtech
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. We usually like to see fairly high levels of insider ownership. Semtech insiders own about US$45m worth of shares. That equates to 1.2% of the company. We’ve certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.
What Might The Insider Transactions At Semtech Tell Us?
Insiders haven’t bought Semtech stock in the last three months, but there was some selling. And even if we look to the last year, we didn’t see any purchases. But since Semtech is profitable and growing, we’re not too worried by this. While insiders do own shares, they don’t own a heap, and they have been selling. We’re in no rush to buy! Therefore, you should should definitely take a look at this FREE report showing analyst forecasts for Semtech.
If you would prefer to check out another company — one with potentially superior financials — then do not miss this free list of interesting companies, that have HIGH return on equity and low debt.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.
