Some Applied Digital Corporation (NASDAQ:APLD) shareholders may be a little concerned to see that the Chairman, Wesley Cummins, recently sold a substantial US$6.0m worth of stock at a price of US$36.42 per share. However, that sale only accounted for 7.0% of their holding, so arguably it doesn't say much about their conviction.

Applied Digital Insider Transactions Over The Last Year

In fact, the recent sale by Chairman Wesley Cummins was not their only sale of Applied Digital shares this year. They previously made an even bigger sale of -US$6.1m worth of shares at a price of US$15.26 per share. That means that even when the share price was below the current price of US$37.40, an insider wanted to cash in some shares. When an insider sells below the current price, it suggests that they considered that lower price to be fair. That makes us wonder what they think of the (higher) recent valuation. While insider selling is not a positive sign, we can't be sure if it does mean insiders think the shares are fully valued, so it's only a weak sign. This single sale was just 13% of Wesley Cummins's stake.

Applied Digital insiders didn't buy any shares over the last year. The chart below shows insider transactions (by companies and individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

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Insider Ownership

For a common shareholder, it is worth checking how many shares are held by company insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. Applied Digital insiders own 6.0% of the company, currently worth about US$625m based on the recent share price. 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 Applied Digital Tell Us?

Insiders haven't bought Applied Digital stock in the last three months, but there was some selling. And there weren't any purchases to give us comfort, over the last year. While insiders do own a lot of shares in the company (which is good), our analysis of their transactions doesn't make us feel confident about the company. While it's good to be aware of 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. In terms of investment risks, we've identified 3 warning signs with Applied Digital and understanding these should be part of your investment process.

Of course Applied Digital 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.