It is not uncommon to see companies perform well in the years after insiders buy shares. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So shareholders might well want to know whether insiders have been buying or selling shares in Altisource Portfolio Solutions S.A. (NASDAQ:ASPS).
What Is Insider Selling?
Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock in the company. However, most countries require that the company discloses such transactions to the market.
We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. But equally, we would consider it foolish to ignore insider transactions altogether. For example, a Harvard University study found that 'insider purchases earn abnormal returns of more than 6% per year'.
Altisource Portfolio Solutions Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider purchase was by Chairman of the Board & CEO William Shepro for US$101k worth of shares, at about US$8.68 per share. Although we like to see insider buying, we note that this large purchase was at significantly below the recent price of US$11.14. While it does suggest insiders consider the stock undervalued at lower prices, this transaction doesn't tell us much about what they think of current prices.
Altisource Portfolio Solutions insiders may have bought shares in the last year, but they didn't sell any. Their average price was about US$10.04. It's great to see insiders putting their own cash into the company's stock, albeit at below the recent share price. 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!
There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of growing companies that insiders are buying.
Insiders at Altisource Portfolio Solutions Have Bought Stock Recently
Over the last three months, we've seen significant insider buying at Altisource Portfolio Solutions. Specifically, Chairman of the Board & CEO William Shepro bought US$101k worth of shares in that time, and we didn't record any sales whatsoever. This could be interpreted as suggesting a positive outlook.
Does Altisource Portfolio Solutions 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. I reckon it's a good sign if insiders own a significant number of shares in the company. Altisource Portfolio Solutions insiders own about US$16m worth of shares. That equates to 9.4% of the company. We've certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.
What Might The Insider Transactions At Altisource Portfolio Solutions Tell Us?
It's certainly positive to see the recent insider purchase. And an analysis of the transactions over the last year also gives us confidence. But we don't feel the same about the fact the company is making losses. Given that insiders also own a fair bit of Altisource Portfolio Solutions we think they are probably pretty confident of a bright future. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. Every company has risks, and we've spotted 2 warning signs for Altisource Portfolio Solutions (of which 1 shouldn't be ignored!) you should know about.
Of course Altisource Portfolio Solutions 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.
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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