Stock Analysis

Insiders Sold AU$2.4m Of Calix Stock Possibly Sending Warning Sign

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Despite a 9.0% gain in Calix Limited's (ASX:CXL) stock price this week, shareholders shouldn't let up. Although prices were relatively low, insiders chose to sell AU$2.4m worth of stock in the past 12 months. This could be a sign of impending weakness.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we would consider it foolish to ignore insider transactions altogether.

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The Last 12 Months Of Insider Transactions At Calix

In the last twelve months, the biggest single sale by an insider was when the Co-Founder, Mark Sceats, sold AU$1.5m worth of shares at a price of AU$4.55 per share. That means that an insider was selling shares at slightly below the current price (AU$5.82). As a general rule we consider it to be discouraging when insiders are selling below the current price, because it suggests they were happy with a lower valuation. However, while insider selling is sometimes discouraging, it's only a weak signal. It is worth noting that this sale was only 4.1% of Mark Sceats's holding.

Calix insiders didn't buy any shares over the last year. 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!

ASX:CXL Insider Trading Volume January 31st 2023

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

Insider Ownership Of Calix

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. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. It's great to see that Calix insiders own 23% of the company, worth about AU$238m. This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.

What Might The Insider Transactions At Calix Tell Us?

The fact that there have been no Calix insider transactions recently certainly doesn't bother us. It's great to see high levels of insider ownership, but looking back over the last year, we don't gain confidence from the Calix insiders selling. 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. At Simply Wall St, we found 2 warning signs for Calix that deserve your attention before buying any shares.

Of course Calix may not be the best stock to buy. So you may wish to see this free collection of high quality companies.

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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