Brooks Automation, Inc. (NASDAQ:BRKS) insiders sold US$5.4m worth of stock, a possible red flag that’s yet to materialize – Simply Wall St

Despite a 7.2% gain in Brooks Automation, Inc.'s (NASDAQ:BRKS) stock price this week, shareholders shouldn't let up. Although prices were relatively low, insiders chose to sell US$5.4m worth of stock in the past 12 months. This could be a sign of impending weakness.

Although we don't think shareholders should simply follow insider transactions, logic dictates you should pay some attention to whether insiders are buying or selling shares.

View our latest analysis for Brooks Automation

The CEO, President & Director, Stephen Schwartz, made the biggest insider sale in the last 12 months. That single transaction was for US$1.9m worth of shares at a price of US$69.62 each. That means that even when the share price was below the current price of US$116, an insider wanted to cash in some shares. 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. However, while insider selling is sometimes discouraging, it's only a weak signal. It is worth noting that this sale was only 6.9% of Stephen Schwartz's holding.

Brooks Automation insiders didn't buy any shares over the last year. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. By clicking on the graph below, you can see the precise details of each insider transaction!

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).

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. Brooks Automation insiders own about US$139m worth of shares (which is 1.6% 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.

The fact that there have been no Brooks Automation insider transactions recently certainly doesn't bother us. It's great to see high levels of insider ownership, but looking back over the last year, we don't gain confidence from the Brooks Automation insiders selling. 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. In terms of investment risks, we've identified 1 warning sign with Brooks Automation and understanding it should be part of your investment process.

If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, that have HIGH return on equity and low debt.

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. 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.

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Brooks Automation, Inc. (NASDAQ:BRKS) insiders sold US$5.4m worth of stock, a possible red flag that's yet to materialize - Simply Wall St