Possible Bearish Signals With Allegro MicroSystems Insiders Disposing Stock

Over the past year, many Allegro MicroSystems, Inc. (NASDAQ:ALGM) insiders sold a significant stake in the company which may have piqued investors' interest. Knowing whether insiders are buying is usually more helpful when evaluating insider transactions, as insider selling can have various explanations. However, shareholders should take a deeper look if several insiders are selling stock over a specific time period.

Although we don't think shareholders should simply follow insider transactions, we do think it is perfectly logical to keep tabs on what insiders are doing.

View our latest analysis for Allegro MicroSystems

The Last 12 Months Of Insider Transactions At Allegro MicroSystems

In the last twelve months, the biggest single sale by an insider was when the Independent Director, Joseph Martin, sold US$658k worth of shares at a price of US$38.73 per share. While insider selling is a negative, to us, it is more negative if the shares are sold at a lower price. It's of some comfort that this sale was conducted at a price well above the current share price, which is US$31.72. So it may not shed much light on insider confidence at current levels.

Over the last year, we can see that insiders have bought 7.84k shares worth US$281k. But they sold 25.50k shares for US$913k. Over the last year we saw more insider selling of Allegro MicroSystems shares, than buying. 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!

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Allegro MicroSystems Insiders Are Selling The Stock

Over the last three months, we've seen significant insider selling at Allegro MicroSystems. Specifically, Independent Director Richard R. Lury ditched US$255k worth of shares in that time, and we didn't record any purchases whatsoever. In light of this it's hard to argue that all the insiders think that the shares are a bargain.

Does Allegro MicroSystems Boast High Insider Ownership?

Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. We usually like to see fairly high levels of insider ownership. It appears that Allegro MicroSystems insiders own 1.5% of the company, worth about US$92m. 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 Allegro MicroSystems Insider Transactions Indicate?

An insider hasn't bought Allegro MicroSystems stock in the last three months, but there was some selling. Despite some insider buying, the longer term picture doesn't make us feel much more positive. Insiders own shares, but we're still pretty cautious, given the history of sales. We'd practice some caution before buying! Of course, the future is what matters most. So if you are interested in Allegro MicroSystems, you should check out this free report on analyst forecasts for the company.

But note: Allegro MicroSystems may not be the best stock to buy. So take a peek at this free list of interesting companies with high ROE 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 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.

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