Don't Ignore The Insider Selling In Garmin

We wouldn't blame Garmin Ltd. (NYSE:GRMN) shareholders if they were a little worried about the fact that Matthew Munn, a company insider, recently netted about US$1.0m selling shares at an average price of US$225. Probably the most concerning element of the whole transaction is that the disposal amounted to 96% of their entire holding.

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The Last 12 Months Of Insider Transactions At Garmin

The insider, Cheng Wei Wang, made the biggest insider sale in the last 12 months. That single transaction was for US$1.8m worth of shares at a price of US$177 each. That means that even when the share price was below the current price of US$225, an insider wanted to cash in some shares. When an insider sells below the current price, it suggests that they considered that lower price to be fair. That makes us wonder what they think of the (higher) recent valuation. However, while insider selling is sometimes discouraging, it's only a weak signal. This single sale was just 23% of Cheng Wei Wang's stake.

Garmin insiders didn't buy any shares over the last year. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

I will like Garmin better if I see some big insider buys. While we wait, check out this free list of undervalued and small cap stocks with considerable, recent, insider buying.

Does Garmin 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. Garmin insiders own about US$8.0b worth of shares (which is 19% of the company). This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.

So What Does This Data Suggest About Garmin Insiders?

Insiders haven't bought Garmin stock in the last three months, but there was some selling. And even if we look at the last year, we didn't see any purchases. On the plus side, Garmin makes money, and is growing profits. It is good to see high insider ownership, but the insider selling leaves us cautious. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Garmin. Every company has risks, and we've spotted 1 warning sign for Garmin you should know about.

Of course Garmin 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 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.