Selling Aehr Test Systems Shares at a Lower Price Than Current Market Value May Have Been a Costly Mistake for Insiders

Aehr Test Systems' (NASDAQ:AEHR) value has fallen 18% in the last week, but insiders who sold US$36m worth of stock over the last year have had less success. Given that the average selling price of US$39.96 is still lower than the current share price, insiders would probably have been better off keeping their shares.

While insider transactions are not the most important thing when it comes to long-term investing, we do think it is perfectly logical to keep tabs on what insiders are doing.

View our latest analysis for Aehr Test Systems

Aehr Test Systems Insider Transactions Over The Last Year

In the last twelve months, the biggest single sale by an insider was when the President, Gayn Erickson, sold US$6.3m worth of shares at a price of US$51.29 per share. We generally don't like to see insider selling, but the lower the sale price, the more it concerns us. It's of some comfort that this sale was conducted at a price well above the current share price, which is US$24.50. So it is hard to draw any strong conclusion from it.

All up, insiders sold more shares in Aehr Test Systems than they bought, over the last year. You can see the insider transactions (by companies and 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!

I will like Aehr Test Systems 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 Aehr Test Systems Have Sold Stock Recently

We've seen more insider selling than insider buying at Aehr Test Systems recently. In that time, insiders dumped US$1.5m worth of shares. On the flip side, Independent Director Howard Slayen spent US$28k on purchasing shares (as mentioned above) . We don't view these transactions as a positive sign.

Does Aehr Test Systems Boast High 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. We usually like to see fairly high levels of insider ownership. Insiders own 5.3% of Aehr Test Systems shares, worth about US$37m. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.

What Might The Insider Transactions At Aehr Test Systems Tell Us?

The insider sales have outweighed the insider buying, at Aehr Test Systems, in the last three months. And our longer term analysis of insider transactions didn't bring confidence, either. But it is good to see that Aehr Test Systems is growing earnings. While insiders do own shares, they don't own a heap, and they have been selling. So we'd only buy after careful consideration. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. Every company has risks, and we've spotted 4 warning signs for Aehr Test Systems (of which 1 is concerning!) you should know about.

Of course Aehr Test Systems may not be the best stock to buy. So you may wish to see this free collection of high quality 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 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.