We often see insiders buying up shares in companies that perform well over the long term. 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 we’ll take a look at whether insiders have been buying or selling shares in Universal Electronics Inc (NASDAQ:UEIC).
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, including certain disclosures.
Insider transactions are not the most important thing when it comes to long-term investing. But logic dictates you should pay some attention to whether insiders are buying or selling shares. As Peter Lynch said, ‘insiders might sell their shares for any number of reasons, but they buy them for only one: they think the price will rise.’
Universal Electronics Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider sale was by Executive Vice President of Asia Cheung Chong for US$181k worth of shares, at about US$51.80 per share. Although we don’t gain confidence from insider selling, we note that this large sale was at well above current price of US$34.48. So it may not shed much light on insider confidence at current levels.
Happily, we note that in the last year insiders paid US$185k for 5.10k shares. On the other hand they divested 13.24k shares, for US$584k. Over the last year we saw more insider selling of Universal Electronics shares, than buying. The sellers received a price of around US$44.07, on average. It’s not particularly great to see insiders were selling shares around current prices (shares recently traded at US$34.48). Since insiders sell for many reasons, we wouldn’t put too much weight on it. You can see the insider transactions over the last year depicted in the chart below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
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Insiders at Universal Electronics Have Sold Stock Recently
Over the last three months, we’ve seen significant insider selling at Universal Electronics. In total, Cheung Chong dumped US$175k worth of shares in that time, and we didn’t record any purchases whatsoever. This may suggest that some insiders think that the shares are not cheap.
For a common shareholder, it is worth checking how many shares are held by company insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. Insiders own 3.9% of Universal Electronics shares, worth about US$19m. We’ve certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.
So What Do The Universal Electronics Insider Transactions Indicate?
An insider sold Universal Electronics shares recently, but they didn’t buy any. Despite some insider buying, the longer term picture doesn’t make us feel much more positive. When you consider that most companies have higher levels of insider ownership, we’re a little wary. We’d certainly think twice before buying! Of course, the future is what matters most. So if you are interested in Universal Electronics, you should check out this free report on analyst forecasts for the company.
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.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at firstname.lastname@example.org.