It is not uncommon to see companies perform well in the years after insiders buy shares. 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 shareholders might well want to know whether insiders have been buying or selling shares in KLA-Tencor Corporation (NASDAQ:KLAC).
What Is Insider Buying?
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, most countries require that the company discloses such transactions to the market.
We don’t think shareholders should simply follow insider transactions. But logic dictates you should pay some attention to whether insiders are buying or selling shares. For example, a Columbia University study found that ‘insiders are more likely to engage in open market purchases of their own company’s stock when the firm is about to reveal new agreements with customers and suppliers’.
The Last 12 Months Of Insider Transactions At KLA-Tencor
Over the last year, we can see that the biggest insider sale was by Director Emiko Higashi for US$251k worth of shares, at about US$117 per share. That means that even when the share price was slightly below the current price of US$120, an insider wanted to cash in some shares. While sellers have a variety of reasons for selling, this isn’t particularly great to see. When an insider sells below the current price, it does tend to make us wonder about the current valuation. It is worth noting that this sale was only 16.5% of Emiko Higashi’s holding. The only individual insider seller over the last year was Emiko Higashi.
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!
For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.
Insider Ownership of KLA-Tencor
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. A high insider ownership often makes company leadership more mindful of shareholder interests. KLA-Tencor insiders own about US$33m worth of shares. That equates to 0.2% of the company. 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 Do The KLA-Tencor Insider Transactions Indicate?
An insider sold KLA-Tencor shares recently, but they didn’t buy any. Despite some insider buying, the longer term picture doesn’t make us feel much more positive. But it is good to see that KLA-Tencor 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. Therefore, you should should definitely take a look at this FREE report showing analyst forecasts for KLA-Tencor.
But note: KLA-Tencor 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.
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If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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.