Don't Ignore The Insider Selling In Liquidity Services

Some Liquidity Services, Inc. (NASDAQ:LQDT) shareholders may be a little concerned to see that the Co-founder, William Angrick, recently sold a substantial US$4.7m worth of stock at a price of US$36.15 per share. However, it's crucial to note that they remain very much invested in the stock and that sale only reduced their holding by 1.9%.

View our latest analysis for Liquidity Services

The Last 12 Months Of Insider Transactions At Liquidity Services

The Director, Jaime Mateus-Tique, made the biggest insider sale in the last 12 months. That single transaction was for US$4.9m worth of shares at a price of US$33.47 each. That means that even when the share price was below the current price of US$34.31, an insider wanted to cash in some shares. 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 19% of Jaime Mateus-Tique's holding.

Liquidity Services 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. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

If you are like me, then you will not want to miss this free list of small cap stocks that are not only being bought by insiders but also have attractive valuations.

Does Liquidity Services Boast High Insider Ownership?

Many investors like to check how much of a company is owned by insiders. We usually like to see fairly high levels of insider ownership. It's great to see that Liquidity Services insiders own 25% of the company, worth about US$270m. I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.

So What Do The Liquidity Services Insider Transactions Indicate?

Insiders sold Liquidity Services shares recently, but they didn't buy any. And there weren't any purchases to give us comfort, over the last year. But it is good to see that Liquidity Services is growing earnings. It is good to see high insider ownership, but the insider selling leaves us cautious. 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 2 warning signs for Liquidity Services and we suggest you have a look.

But note: Liquidity Services 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 of direct interests only, but not derivative transactions or indirect interests.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.