Read This Before Buying Altair Engineering Inc. (NASDAQ:ALTR) Shares

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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 before you buy or sell Altair Engineering Inc. (NASDAQ:ALTR), you may well want to know whether insiders have been buying or selling.

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, 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. 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.'

View our latest analysis for Altair Engineering

The Last 12 Months Of Insider Transactions At Altair Engineering

Over the last year, we can see that the biggest insider sale was by James Brancheau for US$4.0m worth of shares, at about US$33.43 per share. That means that even when the share price was below the current price of US$34.64, an insider wanted to cash in some shares. While their view may have changed since they sold, this isn't a particularly bullish sign. We generally consider it a negative if insiders have been selling on market, especially if they did so below the current price. It is worth noting that this sale was only 9.5% of James Brancheau's holding.

Over the last year, we note insiders sold 375.00k shares worth US$13m. Over the last year we saw more insider selling of Altair Engineering shares, than buying. They sold for an average price of about US$33.43. We don't gain much confidence from insider selling near the recent share price. Since insiders sell for many reasons, we wouldn't put too much weight on it. You can see the insider transactions (by individuals) over the last year depicted in the chart below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

For those who like to find winning investments this freelist of growing companies with recent insider purchasing, could be just the ticket.

Insider Ownership of Altair Engineering

Many investors like to check how much of a company is owned by insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. Altair Engineering insiders own about US$936m worth of shares (which is 38% of the company). This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.

So What Does This Data Suggest About Altair Engineering Insiders?

There haven't been any insider transactions in the last three months -- that doesn't mean much. It's heartening that insiders own plenty of stock, but we'd like to see more insider buying, since the last year of Altair Engineering insider transactions don't fill us with confidence. Therefore, you should should definitely take a look at this FREEreport showing analyst forecasts for Altair Engineering.

But note: Altair Engineering may not be the best stock to buy. So take a peek at this freelist of interesting companies with high ROE and low debt.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. On rare occasion, data errors may occur. Thank you for reading.