Shareholders may want to keep a close watch on Smith Micro Software, Inc. (NASDAQ: SMSI) after insiders sold shares for US $ 2.8 million earlier this year
Although it has been a great week for Smith Micro Software, Inc. (NASDAQ: SMSI) After the stock has gained 13%, they should view it with a grain of salt. Despite the relatively low prices, insiders made the decision to sell $ 2.8 million worth of shares in the past 12 months. This could be a warning indicator of vulnerabilities in the future.
While we never suggest that investors should base their decisions solely on what the directors of a company have done, logic dictates that you pay attention to whether insiders are buying or selling stocks.
Check out our latest review for Smith Micro Software
Smith Micro Software Insider Transactions in the Past Year
In the past year or so, we can see that the biggest insider sale has come from co-founder William Smith for $ 2.5 million in shares, at around $ 4.65 per share. This means that an insider was selling shares at a price slightly lower than the current price (US $ 5.15). When an insider sells below the current price, it suggests that he or she considered that lower price to be fair. This makes us wonder what they think of the recent (higher) valuation. However, while insider selling can be daunting at times, this is only a weak signal. It should be noted that this sale represented only 9.3% of William Smith’s stake.
In the past year, insiders of Smith Micro Software have not purchased any shares in the company. The chart below shows insider trading (by businesses and individuals) over the past year. If you click on the chart you can see all of the individual trades including the stock price, individual and date!
If you are like me then you not want to miss it free list of growing companies that insiders buy.
Smith Micro Software insiders sold shares recently
The past three months have seen significant insider sales at Smith Micro Software. Specifically, insiders gave up $ 2.6 million worth of shares during that time, and we didn’t record any purchases. In light of this, it’s hard to say that all insiders think stocks are a good deal.
Looking at the total insider stakes in a company can help you determine if they are aligned with common shareholders. Usually, the higher the insider ownership, the more likely it is that insiders will have an incentive to build the business for the long term. Insiders own 13% of Smith Micro Software’s shares, worth about $ 36 million. While this is a high but not exceptional level of insider ownership, it is enough to indicate some alignment between management and small shareholders.
So what does this data suggest about Smith Micro Software insiders?
Insiders recently sold stocks, but they haven’t bought. And even though we look at last year, we haven’t seen any purchases. Insider ownership is not particularly high, so this analysis makes us cautious about the company. So we would only buy after careful consideration. So these insider trading can help us build a thesis on the stock, but it’s also worth knowing the risks this company faces. Concrete example: we have spotted 2 warning signs for Smith Micro Software you must be aware.
But beware : Smith Micro Software may not be the best stock to buy. So take a look at this free list of interesting companies with high ROE and low debt.
For the purposes of this article, insiders are the persons who report their transactions to the relevant regulatory body. We currently account for open market transactions and private assignments, but not derivative transactions.
This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts using only unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell shares and does not take into account your goals or your financial situation. Our aim is to bring you long-term, targeted analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price sensitive companies or qualitative material. Simply Wall St does not have any position in the mentioned stocks.
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