Have Applied Optoelectronics Insiders Been Selling Stock?

Some Applied Optoelectronics, Inc. (NASDAQ:AAOI) shareholders may be a little concerned to see that the Senior VP & North America General Manager, Hung-Lun Chang, recently sold a substantial US$617k worth of stock at a price of US$30.35 per share. That's a big disposal, and it decreased their holding size by 21%, which is notable but not too bad.

View our latest analysis for Applied Optoelectronics

The Last 12 Months Of Insider Transactions At Applied Optoelectronics

In fact, the recent sale by Hung-Lun Chang was the biggest sale of Applied Optoelectronics shares made by an insider individual in the last twelve months, according to our records. That means that even when the share price was below the current price of US$37.99, an insider wanted to cash in some shares. We generally consider it a negative if insiders have been selling, especially if they did so below the current price, because it implies that they considered a lower price to be reasonable. While insider selling is not a positive sign, we can't be sure if it does mean insiders think the shares are fully valued, so it's only a weak sign. This single sale was just 21% of Hung-Lun Chang's stake.

In the last twelve months insiders purchased 70.95k shares for US$906k. But they sold 38.82k shares for US$1.3m. In total, Applied Optoelectronics insiders sold more than they bought over the last year. The chart below shows insider transactions (by companies and individuals) over the last year. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

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).

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. We usually like to see fairly high levels of insider ownership. Insiders own 5.1% of Applied Optoelectronics shares, worth about US$88m. 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 Applied Optoelectronics Tell Us?

Insiders haven't bought Applied Optoelectronics stock in the last three months, but there was some selling. Despite some insider buying, the longer term picture doesn't make us feel much more positive. While insiders do own shares, they don't own a heap, and they have been selling. We'd practice some caution before buying! So while it's helpful to know what insiders are doing in terms of buying or selling, it's also helpful to know the risks that a particular company is facing. To that end, you should learn about the 3 warning signs we've spotted with Applied Optoelectronics (including 1 which can't be ignored).

But note: Applied Optoelectronics 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.