Who Has Been Selling Atomos Limited (ASX:AMS) Shares?

By
Simply Wall St
Published
May 24, 2021
ASX:AMS
Source: Shutterstock

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 shareholders might well want to know whether insiders have been buying or selling shares in Atomos Limited (ASX:AMS).

Do Insider Transactions Matter?

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 equally, we would consider it foolish to ignore insider transactions altogether. For example, a Harvard University study found that 'insider purchases earn abnormal returns of more than 6% per year'.

See our latest analysis for Atomos

Atomos Insider Transactions Over The Last Year

The Co-Founder, Jeromy Young, made the biggest insider sale in the last 12 months. That single transaction was for AU$7.4m worth of shares at a price of AU$1.02 each. So what is clear is that an insider saw fit to sell at around the current price of AU$0.94. We generally don't like to see insider selling, but the lower the sale price, the more it concerns us. Given that the sale took place at around current prices, it makes us a little cautious but is hardly a major concern. Jeromy Young was the only individual insider to sell shares in the last twelve months.

Happily, we note that in the last year insiders paid AU$136k for 200.00k shares. But insiders sold 10.00m shares worth AU$10m. Jeromy Young ditched 10.00m shares over the year. The average price per share was AU$1.02. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. By clicking on the graph below, you can see the precise details of each insider transaction!

insider-trading-volume
ASX:AMS Insider Trading Volume May 24th 2021

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

Does Atomos Boast High Insider Ownership?

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. It appears that Atomos insiders own 12% of the company, worth about AU$24m. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.

So What Does This Data Suggest About Atomos Insiders?

It doesn't really mean much that no insider has traded Atomos shares in the last quarter. Our analysis of Atomos insider transactions leaves us cautious. The modest level of insider ownership is, at least, some comfort. So while it's helpful to know what insiders are doing in terms of buying or selling, it's also helpful to know the risks that a particular company is facing. You'd be interested to know, that we found 1 warning sign for Atomos and we suggest you have a look.

But note: Atomos 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.

When trading Atomos or any other investment, use the platform considered by many to be the Professional's Gateway to the Worlds Market, Interactive Brokers. You get the lowest-cost* trading on stocks, options, futures, forex, bonds and funds worldwide from a single integrated account. Promoted


Discounted cash flow calculation for every stock

Simply Wall St does a detailed discounted cash flow calculation every 6 hours for every stock on the market, so if you want to find the intrinsic value of any company just search here. It’s FREE.

Make Confident Investment Decisions

Simply Wall St's Editorial Team provides unbiased, factual reporting on global stocks using in-depth fundamental analysis.
Find out more about our editorial guidelines and team.