We often see insiders buying up shares in companies that perform well over the long term. 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 before you buy or sell Arotech Corporation (NASDAQ:ARTX), you may well want to know whether insiders have been buying or selling.
Do Insider Transactions Matter?
It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, rules govern insider transactions, and certain disclosures are required.
Insider transactions are not the most important thing when it comes to long-term investing. 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.’
The Last 12 Months Of Insider Transactions At Arotech
Chairman of the Board Jon Kutler made the biggest insider purchase in the last 12 months. That single transaction was for US$64k worth of shares at a price of US$3.20 each. That means that an insider was happy to buy shares at above the current price. It’s very possible they regret the purchase, but it’s more likely they are bullish about the company. That purchase may suggest an expectation of positive returns over the long term.
Over the last year, we can see that insiders have bought 113.84k shares worth US$328k. In total, Arotech insiders bought more than they sold over the last year. They paid about US$2.88 on average. These transactions show that insiders have confidence to invest their own money in the stock, albeit at slightly below the recent price of US$2.93. You can see a visual depiction of insider transactions (by individuals) over the last 12 months, below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
Arotech is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Arotech Insiders Bought Stock Recently
We saw some Arotech insider buying shares in the last three months. Director Kenneth Cappell shelled out US$30k for shares in that time. We like it when there are only buyers, and no sellers. However, in this case the amount invested recently is quite small.
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. Based on our data, Arotech insiders have about 2.6% of the stock, worth approximately US$2.0m. We consider this fairly low insider ownership.
So What Do The Arotech Insider Transactions Indicate?
We note a that there has been a tad more insider buying than selling, recently. But the difference isn’t much. But insiders have shown more of an appetite for the stock, over the last year. While we have no worries about the insider transactions, we’d be more comfortable if they owned more Arotech stock. Therefore, you should should definitely take a look at this FREE report showing analyst forecasts for Arotech.
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.
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