Insiders At Garmin Sold US$4.3m In Stock, Alluding To Potential Weakness

The fact that multiple Garmin Ltd. (NYSE:GRMN) insiders offloaded a considerable amount of shares over the past year could have raised some eyebrows amongst investors. When analyzing insider transactions, it is usually more valuable to know whether insiders are buying versus knowing if they are selling, as the latter sends an ambiguous message. However, when multiple insiders sell stock over a specific duration, shareholders should take notice as that could possibly be a red flag.

While insider transactions are not the most important thing when it comes to long-term investing, logic dictates you should pay some attention to whether insiders are buying or selling shares.

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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 an insider was selling shares at slightly below the current price (US$210). 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. While insider selling is not a positive sign, we can't be sure if it does mean insiders think the shares are fully valued, so it's only a weak sign. This single sale was just 23% of Cheng Wei Wang's stake.

In the last year Garmin insiders didn't buy any company stock. The chart below shows insider transactions (by companies and individuals) over the last year. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

Check out our latest analysis for Garmin

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Insider Ownership Of Garmin

Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Garmin insiders own 9.1% of the company, currently worth about US$3.7b based on the recent share price. Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.

So What Do The Garmin Insider Transactions Indicate?

There haven't been any insider transactions in the last three months -- that doesn't mean much. While we feel good about high insider ownership of Garmin, we can't say the same about the selling of shares. Of course, the future is what matters most. So if you are interested in Garmin, you should check out this free report on analyst forecasts for the company.

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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.