We often see insiders buying up shares in companies that perform well over the long term. 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 we’ll take a look at whether insiders have been buying or selling shares in Cabot Microelectronics Corporation (NASDAQ:CCMP).
What Is Insider Buying?
It’s quite normal to see company insiders, such as board members, trading in company stock, from time to time. However, most countries require that the company discloses such transactions to the market.
Insider transactions are not the most important thing when it comes to long-term investing. But it is perfectly logical to keep tabs on what insiders are doing. For example, a Harvard University study found that ‘insider purchases earn abnormal returns of more than 6% per year.’
Cabot Microelectronics Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider sale was by the VP of Asia Pacific Region & CTO, Ananth Naman, for US$523k worth of shares, at about US$97.10 per share. That means that an insider was selling shares at slightly below the current price (US$123). When an insider sells below the current price, it suggests that they considered that lower price to be fair. That makes us wonder what they think of the (higher) recent valuation. However, while insider selling is sometimes discouraging, it’s only a weak signal. It is worth noting that this sale was 90.9% of Ananth Naman’s holding.
In the last twelve months insiders netted US$1.1m for 10350.09 shares sold. In the last year Cabot Microelectronics insiders didn’t buy any company stock. The chart below shows insider transactions (by individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
I will like Cabot Microelectronics 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 Cabot Microelectronics Have Sold Stock Recently
Over the last three months, we’ve seen a bit of insider selling at Cabot Microelectronics. VP and President of Performance Materials Jeffrey Dysard divested only US$39k worth of shares in that time. It’s not great to see insider selling, nor the lack of recent buyers. But the amount sold isn’t enough for us to put any weight on it.
Insider Ownership of Cabot Microelectronics
Many investors like to check how much of a company is owned by insiders. I reckon it’s a good sign if insiders own a significant number of shares in the company. It appears that Cabot Microelectronics insiders own 1.2% of the company, worth about US$43m. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.
So What Does This Data Suggest About Cabot Microelectronics Insiders?
Our data shows a little more insider selling, but no insider buying, in the last three months. However, the sales are not big enough to concern us at all. Recent insider selling makes us a little nervous, in light of the broader picture of Cabot Microelectronics insider transactions. But we do like the fact that insiders own a fair chunk of the company. 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.
Of course Cabot Microelectronics may not be the best stock to buy. So you may wish to see this free collection of high quality companies.
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