We often see insiders buying up shares in companies that perform well over the long term. 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 we’ll take a look at whether insiders have been buying or selling shares in Digi International Inc. (NASDAQ:DGII).
What Is Insider Buying?
It’s quite normal to see company insiders, such as board members, trading in company stock, from time to time. However, rules govern insider transactions, and certain disclosures are required.
Insider transactions are not the most important thing when it comes to long-term investing. But logic dictates you should pay some attention to whether insiders are buying or selling shares. For example, a Columbia University study found that ‘insiders are more likely to engage in open market purchases of their own company’s stock when the firm is about to reveal new agreements with customers and suppliers’.
The Last 12 Months Of Insider Transactions At Digi International
The Vice President of Manufacturing Operations, Jon Nyland, made the biggest insider sale in the last 12 months. That single transaction was for US$354k worth of shares at a price of US$13.44 each. So we know that an insider sold shares at around the present share price of US$12.78. While we don’t usually like to see insider selling, it’s more concerning if the sales take place at a lower price. In this case, the big sale took place at around the current price, so it’s not too bad (but it’s still not a positive).
We note that in the last year insiders divested 36130 shares for a total of US$472k. In the last year Digi International insiders didn’t buy any company stock. The chart below shows insider transactions (by individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
Insiders at Digi International Have Sold Stock Recently
Over the last three months, we’ve seen significant insider selling at Digi International. Specifically, insiders ditched US$118k 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.
Does Digi International Boast High Insider Ownership?
For a common shareholder, it is worth checking how many shares are held by company insiders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. From our data, it seems that Digi International insiders own 2.1% of the company, worth about US$7.7m. We do generally prefer see higher levels of insider ownership.
What Might The Insider Transactions At Digi International Tell Us?
Insiders sold stock recently, but they haven’t been buying. And there weren’t any purchases to give us comfort, over the last year. On the plus side, Digi International makes money, and is growing profits. When you consider that most companies have higher levels of insider ownership, we’re a little wary. So we’re not rushing to buy, to say the least. Therefore, you should should definitely take a look at this FREE report showing analyst forecasts for Digi International.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting 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, but not derivative transactions.
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If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.