Don't Ignore The Fact That This Insider Just Sold Some Shares In Silicom Ltd. (NASDAQ:SILC)

Some Silicom Ltd. (NASDAQ:SILC) shareholders may be a little concerned to see that insider Zohar Zisapel recently sold a substantial US$5.0m worth of stock at a price of US$42.77 per share. That's a big disposal, and it decreased their holding size by 18%, which is notable but not too bad.

See our latest analysis for Silicom

Silicom Insider Transactions Over The Last Year

Notably, that recent sale by Zohar Zisapel is the biggest insider sale of Silicom shares that we've seen in the last year. That means that even when the share price was below the current price of US$48.63, an insider wanted to cash in some shares. When an insider sells below the current price, it suggests that they considered that lower price to be fair. That makes us wonder what they think of the (higher) recent valuation. 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 18% of Zohar Zisapel's stake.

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!

For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

Does Silicom Boast High Insider Ownership?

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. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. It appears that Silicom insiders own 14% of the company, worth about US$47m. While this is a strong but not outstanding level of insider ownership, it's enough to indicate some alignment between management and smaller shareholders.

So What Do The Silicom Insider Transactions Indicate?

An insider sold Silicom shares recently, but they didn't buy any. And there weren't any purchases to give us comfort, over the last year. Insider ownership isn't particularly high, so this analysis makes us cautious about the company. We're in no rush to buy! 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. Case in point: We've spotted 3 warning signs for Silicom you should be aware of, and 1 of them is concerning.

But note: Silicom 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, but not derivative transactions.

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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. 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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