Selling RADCOM Shares at a Lower Price Than Current Market Value May Have Been a Costly Mistake for Insiders

Despite the fact that RADCOM Ltd.'s (NASDAQ:RDCM) value has dropped 13% in the last week insiders who sold US$3.1m worth of stock in the past 12 months have had less success. The average selling price of US$14.69 is still lower than the current share price, or in other words, insiders would have been better off holding on to their shares.

While insider transactions are not the most important thing when it comes to long-term investing, we do think it is perfectly logical to keep tabs on what insiders are doing.

Check out our latest analysis for RADCOM

RADCOM Insider Transactions Over The Last Year

Over the last year, we can see that the biggest insider sale was by the insider, Michael Zisapel, for US$1.4m worth of shares, at about US$14.88 per share. While we don't usually like to see insider selling, it's more concerning if the sales take place 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$11.98. So it may not shed much light on insider confidence at current levels.

Insiders in RADCOM didn't buy any shares in the last year. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

If you like to buy stocks that insiders are buying, rather than selling, then you might just love this free list of companies. (Hint: Most of them are flying under the radar).

Insiders At RADCOM Have Sold Stock Recently

Over the last three months, we've seen significant insider selling at RADCOM. Specifically, insiders ditched US$3.1m worth of shares in that time, and we didn't record any purchases whatsoever. Overall this makes us a bit cautious, but it's not the be all and end all.

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. A high insider ownership often makes company leadership more mindful of shareholder interests. RADCOM insiders own about US$25m worth of shares. That equates to 13% 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.

So What Does This Data Suggest About RADCOM Insiders?

Insiders haven't bought RADCOM stock in the last three months, but there was some selling. And there weren't any purchases to give us comfort, over the last year. On the plus side, RADCOM makes money, and is growing profits. Insider ownership isn't particularly high, so this analysis makes us cautious about the company. We're in no rush to buy! So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. While conducting our analysis, we found that RADCOM has 1 warning sign and it would be unwise to ignore it.

But note: RADCOM 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.