New Zealand markets open in 9 hours 5 minutes
  • NZX 50

    11,631.60
    -46.15 (-0.40%)
     
  • NZD/USD

    0.6337
    +0.0014 (+0.22%)
     
  • ALL ORDS

    7,487.70
    -40.10 (-0.53%)
     
  • OIL

    75.96
    -0.97 (-1.26%)
     
  • GOLD

    1,788.40
    +7.10 (+0.40%)
     

Broadcom Inc.'s (NASDAQ:AVGO)) market cap declines to US$180b but insiders who sold US$25m stock were able to hedge their losses

Insiders at Broadcom Inc. (NASDAQ:AVGO) sold US$25m worth of stock at an average price of US$610 a share over the past year, making the most of their investment. After the stock price dropped 5.3% last week, the company's market value declined by US$10.0b, but insiders were able to mitigate their losses.

Although we don't think shareholders should simply follow insider transactions, we would consider it foolish to ignore insider transactions altogether.

View our latest analysis for Broadcom

Broadcom Insider Transactions Over The Last Year

The insider, Thomas Krause, made the biggest insider sale in the last 12 months. That single transaction was for US$8.1m worth of shares at a price of US$586 each. While we don't usually like to see insider selling, it's more concerning if the sales take place at a lower price. The silver lining is that this sell-down took place above the latest price (US$444). So it is hard to draw any strong conclusion from it.

In total, Broadcom insiders sold more 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 click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

insider-trading-volume
insider-trading-volume

For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

Insider Ownership Of Broadcom

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. We usually like to see fairly high levels of insider ownership. It's great to see that Broadcom insiders own 1.5% of the company, worth about US$2.8b. I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.

What Might The Insider Transactions At Broadcom Tell Us?

It doesn't really mean much that no insider has traded Broadcom shares in the last quarter. It's heartening that insiders own plenty of stock, but we'd like to see more insider buying, since the last year of Broadcom insider transactions don't fill us with confidence. 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. Case in point: We've spotted 1 warning sign for Broadcom you should be aware of.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.

Join A Paid User Research Session
You’ll receive a US$30 Amazon Gift card for 1 hour of your time while helping us build better investing tools for the individual investors like yourself. Sign up here