It is not uncommon to see companies perform well in the years after insiders buy shares. 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 Collectors Universe, Inc. (NASDAQ:CLCT).
What Is Insider Selling?
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, rules govern insider transactions, and certain disclosures are required.
We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. 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'.
Collectors Universe Insider Transactions Over The Last Year
The President, Joseph Orlando, made the biggest insider sale in the last 12 months. That single transaction was for US$160k 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$67.07, 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. 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. We note that the biggest single sale was only 18% of Joseph Orlando's holding.
Happily, we note that in the last year insiders paid US$137k for 4.23k shares. But insiders sold 8.14k shares worth US$244k. In total, Collectors Universe insiders sold more than they bought over the last year. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. By clicking on the graph below, you can see the precise details of each insider transaction!
If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.
Collectors Universe Insiders Bought Stock Recently
There was some insider buying at Collectors Universe over the last quarter. insider Damian Blazy bought US$29k worth of shares in that time. It's good to see the insider buying, as well as the lack of recent sellers. But the amount invested in the last three months isn't enough for us too put much weight on it, as a single factor.
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. I reckon it's a good sign if insiders own a significant number of shares in the company. Collectors Universe insiders own about US$18m worth of shares. That equates to 2.9% of the company. 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 Collectors Universe Insider Transactions Indicate?
We note a that there has been a bit of insider buying recently (but no selling). The net investment is not enough to encourage us much. We don't take much encouragement from the transactions by Collectors Universe insiders. But we do like the fact that insiders own a fair chunk of the company. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Collectors Universe. Every company has risks, and we've spotted 1 warning sign for Collectors Universe you should know about.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting 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, but not derivative transactions.
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