Should You Be Worried About Insider Transactions At NVE Corporation (NASDAQ:NVEC)?

We’ve lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. On the other hand, we’d be remiss not to mention that insider sales have been known to precede tough periods for a business. So shareholders might well want to know whether insiders have been buying or selling shares in NVE Corporation (NASDAQ:NVEC).

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 in the company. However, rules govern insider transactions, and certain disclosures are required.

We don’t think shareholders should simply follow insider transactions. 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.

View our latest analysis for NVE

The Last 12 Months Of Insider Transactions At NVE

In the last twelve months, the biggest single sale by an insider was when the CFO, Treasurer & Secretary, Curt Reynders, sold US$108k worth of shares at a price of US$75.67 per share. We generally don’t like to see insider selling, but the lower the sale price, the more it concerns us. The good news is that this large sale was at well above current price of US$60.53. So it may not shed much light on insider confidence at current levels.

In the last year NVE 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 want to know exactly who sold, for how much, and when, simply click on the graph below!

NasdaqCM:NVEC Recent Insider Trading June 1st 2020
NasdaqCM:NVEC Recent Insider Trading June 1st 2020

If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.

Insider Ownership

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. Our data indicates that NVE insiders own about US$5.2m worth of shares (which is 1.8% of the company). We do generally prefer see higher levels of insider ownership.

What Might The Insider Transactions At NVE Tell Us?

It doesn’t really mean much that no insider has traded NVE shares in the last quarter. The insider transactions at NVE are not inspiring us to buy. We also note that, as far as we can see, insider ownership is fairly low, compared to other companies. So these insider transactions can help us build a thesis about the stock, but it’s also worthwhile knowing the risks facing this company. At Simply Wall St, we found 2 warning signs for NVE that deserve your attention before buying any shares.

But note: NVE 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. Thank you for reading.