Have Broadcom Insiders Been Selling Stock?
Broadcom Limited AVGO | 172.02 172.10 | -0.57% +0.05% Pre |
Some Broadcom Inc. (NASDAQ:AVGO) shareholders may be a little concerned to see that the President of Semiconductor Solutions, Charlie Kawwas, recently sold a substantial US$6.7m worth of stock at a price of US$1,344 per share. However, that sale only accounted for 5.8% of their holding, so arguably it doesn't say much about their conviction.
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Broadcom Insider Transactions Over The Last Year
In the last twelve months, the biggest single sale by an insider was when the President, Hock Tan, sold US$22m worth of shares at a price of US$1,127 per share. That means that an insider was selling shares at slightly below the current price (US$1,325). As a general rule we consider it to be discouraging when insiders are selling below the current price, because it suggests they were happy with a lower valuation. However, while insider selling is sometimes discouraging, it's only a weak signal. It is worth noting that this sale was only 8.7% of Hock Tan's holding.
Over the last year, we can see that insiders have bought 12.00k shares worth US$10m. But they sold 71.77k shares for US$79m. All up, insiders sold more shares in Broadcom than they bought, over the last year. 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!
If you like to buy stocks that insiders are buying, rather than selling, then you might just love this free list of companies. (Hint: insiders have been buying them).
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. Broadcom insiders own about US$8.2b worth of shares (which is 1.3% of the company). 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 Does This Data Suggest About Broadcom Insiders?
Insiders sold Broadcom shares recently, but they didn't buy any. Despite some insider buying, the longer term picture doesn't make us feel much more positive. It is good to see high insider ownership, but the insider selling leaves us cautious. While we like knowing what's going on with the insider's ownership and transactions, we make sure to also consider what risks are facing a stock before making any investment decision. Every company has risks, and we've spotted 4 warning signs for Broadcom you should know about.
Of course Broadcom 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 of direct interests only, but not derivative transactions or indirect interests.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.