It is not uncommon to see companies perform well in the years after insiders buy shares. The flip side of that is that there are more than a few examples of insiders dumping stock prior to a period of weak performance. So before you buy or sell Sykes Enterprises Incorporated (NASDAQ:SYKE), you may well want to know whether insiders have been buying or selling.
What Is Insider Buying?
It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, rules govern insider transactions, including certain disclosures.
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.’
The Last 12 Months Of Insider Transactions At Sykes Enterprises
In the last twelve months, the biggest single sale by an insider was when President Charles Sykes sold US$1.6m worth of shares at a price of US$31.50 per share. So what is clear is that an insider saw fit to sell at around the current price of US$27.09. While their view may have changed since the sale, this is not a particularly positive fact. We usually pause to reflect on the potential that a stock has a high valuation, if insiders have been selling at that price.
We note that in the last year insiders divested 91.08k shares for a total of US$2.8m. You can see the insider transactions over the last year depicted in the chart below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
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Insiders at Sykes Enterprises Have Sold Stock Recently
Over the last three months, we’ve seen significant insider selling at Sykes Enterprises. Specifically, Executive VP James Holder ditched US$249k worth of shares in that time, and we didn’t record any purchases whatsoever. In light of this it’s hard to argue that all the directors think that the shares are a bargain.
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. I reckon it’s a good sign if insiders own a significant number of shares in the company. Sykes Enterprises insiders own about US$85m worth of shares. That equates to 7.4% of the company. We’ve certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.
So What Do The Sykes Enterprises Insider Transactions Indicate?
An insider sold Sykes Enterprises shares recently, but they didn’t buy any. Furthermore, transactions over the last twelve months dispel the notion that insiders won’t sell readily. Insiders own relatively few shares in the company, and when you consider the sales, we’re not particularly excited about the stock. As the saying goes, only fools rush in. Of course, the future is what matters most. So if you are interested in Sykes Enterprises, you should check out this free report on analyst forecasts for the company.
Of course Sykes Enterprises may not be the best stock to buy. So you may wish to see this free collection of high quality companies.
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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.