It is not uncommon to see companies perform well in the years after insiders buy shares. 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 Arrow Electronics, Inc. (NYSE:ARW).
What Is Insider Buying?
Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock on the market. 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 Colombia 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’.
Check out our latest analysis for Arrow Electronics
The Last 12 Months Of Insider Transactions At Arrow Electronics
In the last twelve months, the biggest single sale by an insider was when Chairman Michael Long sold US$4.2m worth of shares at a price of US$83.26 per share. That means that an insider was selling shares at around the current price of US$67.54. They might be selling for a variety of reasons, but it’s hard to argue this is a bullish sign. Arguably, insider selling at around current prices should give us reason to reflect on whether the stock is fully valued at the moment.
We note that in the last year insiders divested 71.15k shares for a total of US$5.8m. Over the last year we saw more insider selling of Arrow Electronics shares, than buying. The average sell price was around US$81.84. It’s not particularly great to see insiders were selling shares around current prices. Since insiders sell for many reasons, we wouldn’t put too much weight on it. The chart below shows insider transactions 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 alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).
Arrow Electronics Insiders Are Selling The Stock
The last quarter saw substantial insider selling of Arrow Electronics shares. In total, Charles Kostalnick dumped US$52k 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.
Insider Ownership of Arrow Electronics
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. We usually like to see fairly high levels of insider ownership. Arrow Electronics insiders own 0.9% of the company, currently worth about US$52m based on the recent share price. I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.
So What Do The Arrow Electronics Insider Transactions Indicate?
An insider sold stock recently, but they haven’t been buying. Looking to the last twelve months, our data doesn’t show any insider buying. But it is good to see that Arrow Electronics is growing earnings. Insider ownership isn’t particularly high, so this analysis makes us cautious about the company. We’d think twice before buying! Of course, the future is what matters most. So if you are interested in Arrow Electronics, you should check out this free report on analyst forecasts for the company.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.