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When a single insider purchases stock, it is typically not a major deal. However, when multiple insiders purchase stock, like in Aehr Test Systems, Inc.'s (NASDAQ:AEHR) instance, it's good news for shareholders.
While insider transactions are not the most important thing when it comes to long-term investing, we would consider it foolish to ignore insider transactions altogether.
Check out our latest analysis for Aehr Test Systems
The Last 12 Months Of Insider Transactions At Aehr Test Systems
In the last twelve months, the biggest single purchase by an insider was when Independent Director Howard Slayen bought US$310k worth of shares at a price of US$15.50 per share. So it's clear an insider wanted to buy, even at a higher price than the current share price (being US$10.77). It's very possible they regret the purchase, but it's more likely they are bullish about the company. We always take careful note of the price insiders pay when purchasing shares. It is generally more encouraging if they paid above the current price, as it suggests they saw value, even at higher levels.
Happily, we note that in the last year insiders paid US$408k for 25.04k shares. But they sold 11.26k shares for US$210k. In the last twelve months there was more buying than selling by Aehr Test Systems insiders. The chart below shows insider transactions (by companies and individuals) 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!
There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of undervalued small cap companies that insiders are buying.
Insider Ownership Of Aehr Test Systems
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. I reckon it's a good sign if insiders own a significant number of shares in the company. It appears that Aehr Test Systems insiders own 5.9% of the company, worth about US$20m. 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 Aehr Test Systems Tell Us?
There haven't been any insider transactions in the last three months -- that doesn't mean much. But insiders have shown more of an appetite for the stock, over the last year. Insiders own shares in Aehr Test Systems and we see no evidence to suggest they are worried about the future. So while it's helpful to know what insiders are doing in terms of buying or selling, it's also helpful to know the risks that a particular company is facing. To help with this, we've discovered 2 warning signs (1 is concerning!) that you ought to be aware of before buying any shares in Aehr Test Systems.