Should You Take Comfort From Insider Transactions At Pixelworks, Inc. (NASDAQ:PXLW)?

It is not uncommon to see companies perform well in the years after insiders buy shares. On the other hand, we’d be remiss not to mention that insider sales have been known to precede tough periods for a business. So shareholders might well want to know whether insiders have been buying or selling shares in Pixelworks, Inc. (NASDAQ:PXLW).

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.

We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. But it is perfectly logical to keep tabs on what insiders are doing. 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.’

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Pixelworks Insider Transactions Over The Last Year

Director Daniel Heneghan made the biggest insider purchase in the last 12 months. That single transaction was for US$87k worth of shares at a price of US$4.33 each. That means that an insider was happy to buy shares at above the current price. While their view may have changed since the purchase was made, this does at least suggest they have had confidence in the company’s future. We generally consider it a positive if insiders have been buying on market, even above the current price.

In the last twelve months insiders paid US$177k for 43.00k shares purchased. In the last twelve months there was more buying than selling by Pixelworks insiders. The average buy price was around US$4.12. I’d consider this a positive as it suggests insiders see value at around the current price, which is US$3.21. The chart below shows insider transactions (by individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!

NasdaqGM:PXLW Insider Trading January 11th 19
NasdaqGM:PXLW Insider Trading January 11th 19

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

Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. A high insider ownership often makes company leadership more mindful of shareholder interests. Pixelworks insiders own about US$15m worth of shares. That equates to 12% of the company. While this is a strong but not outstanding level of insider ownership, it’s enough to indicate some alignment between management and smaller shareholders.

What Might The Insider Transactions At Pixelworks Tell Us?

It doesn’t really mean much that no insider has traded Pixelworks shares in the last quarter. But insiders have shown more of an appetite for the stock, over the last year. Insiders own shares in Pixelworks and we see no evidence to suggest they are worried about the future. 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 Pixelworks may not be the best stock to buy. So you may wish to see this free collection of high quality companies.

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.