We often see insiders buying up shares in companies that perform well over the long term. 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 we’ll take a look at whether insiders have been buying or selling shares in Rambus Inc. (NASDAQ:RMBS).
What Is Insider Selling?
It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, rules govern insider transactions, and certain disclosures are required.
We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. But logic dictates you should pay some attention to whether insiders are buying or selling shares. For example, a Harvard University study found that ‘insider purchases earn abnormal returns of more than 6% per year.’
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Rambus Insider Transactions Over The Last Year
In the last twelve months, the biggest single sale by an insider was when Chairman Eric Stang sold US$74k worth of shares at a price of US$12.33 per share. While the sale doesn’t make us feel confident, we do note it was conducted at a price well above the current share price, which is US$8.22. So it is hard to draw any strong conclusion from it.
In the last twelve months insiders netted US$136k for 11.90k shares sold. Over the last year we saw more insider selling of Rambus shares, than buying. The average sell price was around US$11.47. Insider selling doesn’t make us excited to buy. But the selling was at much higher prices than the current share price (US$8.22), so it probably doesn’t tell us a lot about the value on offer today. You can see the insider transactions (by 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!
If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).
Insider Ownership of Rambus
For a common shareholder, it is worth checking how many shares are held by company insiders. I reckon it’s a good sign if insiders own a significant number of shares in the company. Our data suggests Rambus insiders own 0.5% of the company, worth about US$4.6m. We consider this fairly low insider ownership.
So What Does This Data Suggest About Rambus Insiders?
The fact that there have been no Rambus insider transactions recently certainly doesn’t bother us. We don’t take much encouragement from the transactions by Rambus insiders. And usually insiders own more stock in the company, according to our data. Therefore, you should should definitely take a look at this FREE report showing analyst forecasts for Rambus.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting 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 email@example.com.