We often see insiders buying up shares in companies that perform well over the long term. On the other hand, we’d be remiss not to mention that insider sales have been known to precede tough periods for a business. So shareholders might well want to know whether insiders have been buying or selling shares in ORBCOMM Inc. (NASDAQ:ORBC).
Do Insider Transactions Matter?
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 it is perfectly logical to keep tabs on what insiders are doing. For example, a Harvard University study found that ‘insider purchases earn abnormal returns of more than 6% per year’.
ORBCOMM Insider Transactions Over The Last Year
The Non-Executive Chairman of the Board, Jerome Eisenberg, made the biggest insider sale in the last 12 months. That single transaction was for US$1.0m worth of shares at a price of US$6.96 each. So it’s clear an insider wanted to take some cash off the table, even below the current price of US$7.59. We generally consider it a negative if insiders have been selling, especially if they did so below the current price, because it implies that they considered a lower price to be reasonable. 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 15% of Jerome Eisenberg’s stake. Jerome Eisenberg was the only individual insider to sell over the last year.
The chart below shows insider transactions (by companies and individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
I will like ORBCOMM better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
For a common shareholder, it is worth checking how many shares are held by company insiders. I reckon it’s a good sign if insiders own a significant number of shares in the company. ORBCOMM insiders own about US$19m worth of shares. That equates to 3.2% of the company. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.
So What Do The ORBCOMM Insider Transactions Indicate?
There haven’t been any insider transactions in the last three months — that doesn’t mean much. Still, the insider transactions at ORBCOMM in the last 12 months are not very heartening. The modest level of insider ownership is, at least, some comfort. Of course, the future is what matters most. So if you are interested in ORBCOMM, you should check out this free report on analyst forecasts for the company.
Of course ORBCOMM may not be the best stock to buy. So you may wish to see this free collection of high quality 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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