This Insider Has Just Sold Shares In NVE

We wouldn't blame NVE Corporation (NASDAQ:NVEC) shareholders if they were a little worried about the fact that Daniel Baker, the CEO, President & Director recently netted about US$1.6m selling shares at an average price of US$114. That sale reduced their total holding by 23% which is hardly insignificant, but far from the worst we've seen.

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NVE Insider Transactions Over The Last Year

Notably, that recent sale by Daniel Baker is the biggest insider sale of NVE shares that we've seen in the last year. That means that an insider was selling shares at below the current price (US$115). We generally consider it a negative if insiders have been selling, 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. We note that the biggest single sale was only 23% of Daniel Baker's holding.

Daniel Baker ditched 14.88k shares over the year. The average price per share was US$111. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. By clicking on the graph below, you can see the precise details of each insider transaction!

Check out our latest analysis for NVE

I will like NVE better if I see some big insider buys. While we wait, check out this free list of undervalued and small cap stocks with considerable, recent, insider buying.

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. I reckon it's a good sign if insiders own a significant number of shares in the company. Insiders own 1.3% of NVE shares, worth about US$7.1m, according to our data. Overall, this level of ownership isn't that impressive, but it's certainly better than nothing!

So What Do The NVE Insider Transactions Indicate?

An insider sold stock recently, but they haven't been buying. And even if we look at the last year, we didn't see any purchases. But since NVE is profitable and growing, we're not too worried by this. When you combine this with the relatively low insider ownership, we are very cautious about the stock. So we'd only buy after very careful consideration. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. Our analysis shows 4 warning signs for NVE (3 shouldn't be ignored!) and we strongly recommend you look at them before investing.

But note: NVE 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.