Some Broadcom Inc. (NASDAQ:AVGO) shareholders may be a little concerned to see that the Senior VP & Chief Sales Officer, Charlie Kawwas, recently sold a substantial US$3.4m worth of stock at a price of US$359 per share. That sale reduced their total holding by 29% which is hardly insignificant, but far from the worst we’ve seen.
The Last 12 Months Of Insider Transactions At Broadcom
In the last twelve months, the biggest single sale by an insider was when the CFO & Secretary, Thomas Krause, sold US$13m worth of shares at a price of US$318 per share. So it’s clear an insider wanted to take some cash off the table, even below the current price of US$360. As a general rule we consider it to be discouraging when insiders are selling below the current price, because it suggests they were happy with a lower valuation. While insider selling is not a positive sign, we can’t be sure if it does mean insiders think the shares are fully valued, so it’s only a weak sign. We note that the biggest single sale was 99% of Thomas Krause’s holding.
In total, Broadcom insiders sold more than they bought over the last year. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
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Insider Ownership of Broadcom
Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. We usually like to see fairly high levels of insider ownership. Broadcom insiders own 3.2% of the company, currently worth about US$4.6b based on the recent share price. Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.
What Might The Insider Transactions At Broadcom Tell Us?
The stark truth for Broadcom is that there has been more insider selling than insider buying in the last three months. And our longer term analysis of insider transactions didn’t bring confidence, either. It is good to see high insider ownership, but the insider selling leaves us cautious. While we like knowing what’s going on with the insider’s ownership and transactions, we make sure to also consider what risks are facing a stock before making any investment decision. To help with this, we’ve discovered 3 warning signs (1 makes us a bit uncomfortable!) that you ought to be aware of before buying any shares in Broadcom.
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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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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. 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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