Investors who take an interest in GigaMedia Limited (NASDAQ:GIGM) should definitely note that the Chairman, Cheng-Ming Huang, recently paid US$2.35 per share to buy US$164k worth of the stock. While that’s a very decent purchase to our minds, it was proportionally a bit modest, boosting their holding by just 8.7%.
The Last 12 Months Of Insider Transactions At GigaMedia
Notably, that recent purchase by Chairman Cheng-Ming Huang was not the only time they bought GigaMedia shares this year. They previously made an even bigger purchase of US$419k worth of shares at a price of US$2.91 per share. That means that an insider was happy to buy shares at above the current price of US$2.28. Their view may have changed since then, but at least it shows they felt optimistic at the time. In our view, the price an insider pays for shares is very important. As a general rule, we feel more positive about a stock when an insider has bought shares at above current prices, because that suggests they viewed the stock as good value, even at a higher price. Cheng-Ming Huang was the only individual insider to buy over the year.
Cheng-Ming Huang bought 393k shares over the last 12 months at an average price of US$2.67. You can see a visual depiction of insider transactions (by individuals) over the last 12 months, below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
Does GigaMedia 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. GigaMedia insiders own about US$10m worth of shares. That equates to 40% of the company. While this is a strong but not outstanding level of insider ownership, it’s enough to indicate some alignment between management and smaller shareholders.
So What Do The GigaMedia Insider Transactions Indicate?
It is good to see the recent insider purchase. And an analysis of the transactions over the last year also gives us confidence. But on the other hand, the company made a loss last year, which makes us a little cautious. Insiders likely see value in GigaMedia shares, given these transactions (along with notable insider ownership of the company). To put this in context, take a look at how a company has performed in the past. You can access this detailed graph of past earnings, revenue and cash flow .
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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, but not derivative transactions.
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