Insider Sellers Might Regret Selling Applied Optoelectronics Shares at a Lower Price Than Current Market Value

Applied Optoelectronics, Inc.'s (NASDAQ:AAOI) value has fallen 12% in the last week, but insiders who sold US$2.5m 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$12.65 is still below the current share price.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we would consider it foolish to ignore insider transactions altogether.

Check out our latest analysis for Applied Optoelectronics

The Last 12 Months Of Insider Transactions At Applied Optoelectronics

In the last twelve months, the biggest single sale by an insider was when the CFO & Chief Strategy Officer, Stefan Murry, sold US$709k worth of shares at a price of US$11.82 per share. We generally don't like to see insider selling, but the lower the sale price, the more it concerns us. It's of some comfort that this sale was conducted at a price well above the current share price, which is US$8.87. So it may not tell us anything about how insiders feel about the current share price.

Happily, we note that in the last year insiders paid US$1.6m for 127.72k shares. But insiders sold 200.52k shares worth US$2.5m. All up, insiders sold more shares in Applied Optoelectronics than they bought, over 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!

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Applied Optoelectronics Insiders Bought Stock Recently

Over the last three months, we've seen significant insider buying at Applied Optoelectronics. Specifically, Lead Independent Director William Yeh bought US$103k worth of shares in that time, and we didn't record any sales whatsoever. That shows some optimism about the company's future.

Insider Ownership Of Applied Optoelectronics

Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. A high insider ownership often makes company leadership more mindful of shareholder interests. Insiders own 5.5% of Applied Optoelectronics shares, worth about US$22m. 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?

It's certainly positive to see the recent insider purchase. On the other hand the transaction history, over the last year, isn't so positive. While recent transactions indicate confidence in Applied Optoelectronics, insiders don't own enough of the company to overcome our cautiousness about the longer term transactions. Overall they seem reasonably aligned. While it's good to be aware of what's going on with the insider's ownership and transactions, we make sure to also consider what risks are facing a stock before making any investment decision. Our analysis shows 3 warning signs for Applied Optoelectronics (1 is a bit concerning!) and we strongly recommend you look at them before investing.

Of course Applied Optoelectronics 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.

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