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

Applied Optoelectronics, Inc.'s (NASDAQ:AAOI) stock price has dropped 25% in the previous week, but insiders who sold US$2.8m in stock over the past year have had less luck. Insiders might have been better off holding onto their shares, given that the average selling price of US$36.57 is still below the current share price.

While insider transactions are not the most important thing when it comes to long-term investing, we would consider it foolish to ignore insider transactions altogether.

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The Last 12 Months Of Insider Transactions At Applied Optoelectronics

The Senior VP & North America General Manager, Hung-Lun Chang, made the biggest insider sale in the last 12 months. That single transaction was for US$617k worth of shares at a price of US$30.35 each. While insider selling is a negative, to us, it is more negative if the shares are sold at a lower price. The silver lining is that this sell-down took place above the latest price (US$10.43). So it may not tell us anything about how insiders feel about the current share price.

All up, insiders sold more shares in Applied Optoelectronics than they bought, over the last year. You can see the insider transactions (by companies and individuals) 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!

Check out our latest analysis for Applied Optoelectronics

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Insider Ownership Of Applied Optoelectronics

I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. Applied Optoelectronics insiders own about US$27m worth of shares. That equates to 4.6% 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.

What Might The Insider Transactions At Applied Optoelectronics Tell Us?

There haven't been any insider transactions in the last three months -- that doesn't mean much. We don't take much encouragement from the transactions by Applied Optoelectronics insiders. The modest level of insider ownership is, at least, some comfort. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. At Simply Wall St, we found 2 warning signs for Applied Optoelectronics that deserve your attention before buying any shares.

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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.