Insiders Could Have Profited By Holding onto AudioEye Shares Despite 10% Drop

AudioEye, Inc.'s (NASDAQ:AEYE) value has fallen 10% in the last week, but insiders who sold US$5.9m worth of stock over the last year have had less success. Insiders might have been better off holding onto their shares, given that the average selling price of US$24.11 is still below the current share price.

Although we don't think shareholders should simply follow insider transactions, we would consider it foolish to ignore insider transactions altogether.

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The Last 12 Months Of Insider Transactions At AudioEye

Over the last year, we can see that the biggest insider sale was by the Executive Chairman, Carr Bettis, for US$5.4m worth of shares, at about US$24.00 per share. While insider selling is a negative, to us, it is more negative if the shares are sold at a lower price. It's of some comfort that this sale was conducted at a price well above the current share price, which is US$9.97. So it may not shed much light on insider confidence at current levels.

In the last twelve months insiders purchased 20.63k shares for US$355k. But they sold 242.83k shares for US$5.9m. All up, insiders sold more shares in AudioEye than they bought, over the last year. The chart below shows insider transactions (by companies and individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!

See our latest analysis for AudioEye

I will like AudioEye 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.

AudioEye Insiders Bought Stock Recently

Over the last three months, we've seen significant insider buying at AudioEye. Independent Director James Hawkins spent US$205k on stock, and there wasn't any selling. This makes one think the business has some good points.

Insider Ownership

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. AudioEye insiders own about US$20m worth of shares. That equates to 16% 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 AudioEye Tell Us?

The recent insider purchase is heartening. On the other hand the transaction history, over the last year, isn't so positive. The more recent transactions are a positive, but AudioEye insiders haven't shown the sustained enthusiasm that we look for, although they do own a decent number of shares, overall. So they seem pretty well aligned, overall. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing AudioEye. To assist with this, we've discovered 1 warning sign that you should run your eye over to get a better picture of AudioEye.

Of course AudioEye may not be the best stock to buy. So you may wish to see this free collection of high quality companies.

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.