Read This Before Buying Allied Esports Entertainment Inc. (NASDAQ:AESE) Shares

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 we'll take a look at whether insiders have been buying or selling shares in Allied Esports Entertainment Inc. (NASDAQ:AESE).

Do Insider Transactions Matter?

Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock in the company. However, such insiders must disclose their trading activities, and not trade on inside information.

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 Columbia University study found that 'insiders are more likely to engage in open market purchases of their own company’s stock when the firm is about to reveal new agreements with customers and suppliers'.

Check out our latest analysis for Allied Esports Entertainment

Allied Esports Entertainment Insider Transactions Over The Last Year

The Independent Chairman of the Board, Lyle Berman, made the biggest insider sale in the last 12 months. That single transaction was for US$1.2m worth of shares at a price of US$2.53 each. While insider selling is a negative, to us, it is more negative if the shares are sold at a lower price. The silver lining is that this sell-down took place above the latest price (US$1.99). So it is hard to draw any strong conclusion from it. The only individual insider seller over the last year was Lyle Berman.

You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. By clicking on the graph below, you can see the precise details of each insider transaction!

I will like Allied Esports Entertainment better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.

Insiders at Allied Esports Entertainment Have Bought Stock Recently

Over the last three months, we've seen significant insider buying at Allied Esports Entertainment. Specifically, insider Roy Choi bought US$101k worth of shares in that time, and we didn't record any sales whatsoever. That shows some optimism about the company's future.

Insider Ownership

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. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. From our data, it seems that Allied Esports Entertainment insiders own 6.0% of the company, worth about US$4.2m. However, it's possible that insiders might have an indirect interest through a more complex structure. We do generally prefer see higher levels of insider ownership.

So What Do The Allied Esports Entertainment Insider Transactions Indicate?

It is good to see the recent insider purchase. However, the longer term transactions are not so encouraging. We're not thrilled with the relatively low insider ownership and the longer term transaction history. But we like the recent purchasing. While we like knowing what's going on with the insider's ownership and transactions, we make sure to also consider what risks are facing a stock before making any investment decision. At Simply Wall St, we've found that Allied Esports Entertainment has 5 warning signs (1 makes us a bit uncomfortable!) that deserve your attention before going any further with your analysis.

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.

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, but not derivative transactions.

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This article by Simply Wall St is general in nature. 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.
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