Should You Be Worried About Insider Transactions At Liquidity Services, Inc. (NASDAQ:LQDT)?

We’ve lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. 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 shareholders might well want to know whether insiders have been buying or selling shares in Liquidity Services, Inc. (NASDAQ:LQDT).

What Is Insider Buying?

Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock on the market. However, most countries require that the company discloses such transactions to the market.

We don’t think shareholders should simply follow insider transactions. But equally, we would consider it foolish to ignore insider transactions altogether. For example, a Harvard University study found that ‘insider purchases earn abnormal returns of more than 6% per year.’

See our latest analysis for Liquidity Services

Liquidity Services Insider Transactions Over The Last Year

In the last twelve months, the biggest single sale by an insider was when Executive VP & CFO Jorge Celaya sold US$422k worth of shares at a price of US$7.05 per share. That means that even when the share price was below the current price of US$7.34, an insider wanted to cash in some shares. Even though it doesn’t necessarily mean anything, that’s certainly not a positive sign, in our book. When an insider sells below the current price, it does tend to make us wonder about the current valuation. Please note, however, that this single sale was 100% of Jorge Celaya’s stake.

In the last twelve months insiders netted US$778k for 116.79k shares sold. Over the last year we saw more insider selling of Liquidity Services shares, than buying. They sold for an average price of about US$6.66. We don’t gain much confidence from insider selling near the recent share price. But we don’t put too much weight on the insider selling, since sellers could have personal reasons. You can see the insider transactions (by 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!

NasdaqGS:LQDT Recent Insider Trading, April 4th 2019
NasdaqGS:LQDT Recent Insider Trading, April 4th 2019

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

Liquidity Services Insiders Are Selling The Stock

Over the last three months, we’ve seen significant insider selling at Liquidity Services. In total, insiders dumped US$146k worth of shares in that time, and we didn’t record any purchases whatsoever. This may suggest that some insiders think that the shares are not cheap.

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. Liquidity Services insiders own about US$47m worth of shares. That equates to 19% 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 Does This Data Suggest About Liquidity Services Insiders?

Insiders haven’t bought Liquidity Services stock in the last three months, but there was some selling. And there weren’t any purchases to give us comfort, over the last year. Insiders own shares, but we’re still pretty cautious, given the history of sales. We’re in no rush to buy! Of course, the future is what matters most. So if you are interested in Liquidity Services, you should check out this free report on analyst forecasts for the company.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.

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If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.