We often see insiders buying up shares in companies that perform well over the long term. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So shareholders might well want to know whether insiders have been buying or selling shares in Silicon Laboratories Inc. (NASDAQ:SLAB).
Do Insider Transactions Matter?
It’s quite normal to see company insiders, such as board members, trading in company stock, from time to time. 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’.
The Last 12 Months Of Insider Transactions At Silicon Laboratories
In the last twelve months, the biggest single sale by an insider was when the Director, William Bock, sold US$190k worth of shares at a price of US$95.00 per share. That means that an insider was selling shares at slightly below the current price (US$101). When an insider sells below the current price, it suggests that they considered that lower price to be fair. That makes us wonder what they think of the (higher) recent 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 5.4% of William Bock’s holding. William Bock was the only individual insider to sell shares in the last twelve months.
You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
If you like to buy stocks that insiders are buying, rather than selling, then you might just love this free list of companies. (Hint: insiders have been buying them).
Silicon Laboratories Insiders Are Selling The Stock
The last three months saw significant insider selling at Silicon Laboratories. In total, Director William Bock sold US$190k worth of shares in that time, and we didn’t record any purchases whatsoever. Overall this makes us a bit cautious, but it’s not the be all and end all.
Insider Ownership of Silicon Laboratories
Many investors like to check how much of a company is owned by insiders. I reckon it’s a good sign if insiders own a significant number of shares in the company. Silicon Laboratories insiders own about US$82m worth of shares. That equates to 1.9% of the company. While this is a strong but not outstanding level of insider ownership, it’s enough to indicate some alignment between management and smaller shareholders.
What Might The Insider Transactions At Silicon Laboratories Tell Us?
An insider hasn’t bought Silicon Laboratories 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. While insiders do own shares, they don’t own a heap, and they have been selling. We’re in no rush to buy! So these insider transactions can help us build a thesis about the stock, but it’s also worthwhile knowing the risks facing this company. To assist with this, we’ve discovered 2 warning signs that you should run your eye over to get a better picture of Silicon Laboratories.
But note: Silicon Laboratories 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. We currently account for open market transactions and private dispositions, but not derivative transactions.
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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. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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