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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 before you buy or sell Advanced Micro Devices, Inc. (NASDAQ:AMD), you may well want to know whether insiders have been buying or selling.
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 on the market. However, such insiders must disclose their trading activities, and not trade on inside information.
We don’t think shareholders should simply follow insider transactions. But equally, we would consider it foolish to ignore insider transactions altogether. 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.’
Check out our latest analysis for Advanced Micro Devices
The Last 12 Months Of Insider Transactions At Advanced Micro Devices
In the last twelve months, the biggest single sale by an insider was when the , Ahmed Al Idrissi, sold US$1.2m worth of shares at a price of US$24.08 per share. So it’s clear an insider wanted to take some cash off the table, even below the current price of US$32.41. We generally consider it a negative if insiders have been selling on market, especially if they did so below the current price, because it implies that they considered a lower price to be reasonable. However, while insider selling is sometimes discouraging, it’s only a weak signal. This single sale was just 38.1% of Ahmed Al Idrissi’s stake.
Over the last year, we note insiders sold 66000 shares worth US$1.7m. Insiders in Advanced Micro Devices didn’t buy any shares in the last year. 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!
If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.
Advanced Micro Devices Insiders Are Selling The Stock
The last three months saw significant insider selling at Advanced Micro Devices. In total, Corporate VP & Chief Accounting Officer Darla Smith dumped US$442k 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
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. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. It’s great to see that Advanced Micro Devices insiders own 0.7% of the company, worth about US$247m. This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.
So What Does This Data Suggest About Advanced Micro Devices Insiders?
An insider sold Advanced Micro Devices shares recently, but they didn’t buy any. Looking to the last twelve months, our data doesn’t show any insider buying. On the plus side, Advanced Micro Devices makes money, and is growing profits. The company boasts high insider ownership, but we’re a little hesitant, given the history of share sales. If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its future.
If you would prefer to check out another company — one with potentially superior financials — then do not miss this free list of interesting companies, that have HIGH return on equity and low debt.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
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.