Some Applied Optoelectronics, Inc. (NASDAQ:AAOI) shareholders may be a little concerned to see that the Founder, Chih-Hsiang Lin, recently sold a substantial US$10m worth of stock at a price of US$173 per share. However, it's crucial to note that they remain very much invested in the stock and that sale only reduced their holding by 2.8%.

Applied Optoelectronics Insider Transactions Over The Last Year

Notably, that recent sale by Chih-Hsiang Lin is the biggest insider sale of Applied Optoelectronics shares that we've seen in the last year. That means that even when the share price was below the current price of US$181, 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. Please do note, however, that sellers may have a variety of reasons for selling, so we don't know for sure what they think of the stock price. This single sale was just 2.8% of Chih-Hsiang Lin's stake.

Happily, we note that in the last year insiders paid US$1.3m for 56.78k shares. But they sold 435.23k shares for US$54m. In total, Applied Optoelectronics insiders sold more than they bought over the last year. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart 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: Most of them are flying under the radar).

Does Applied Optoelectronics 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. It's great to see that Applied Optoelectronics insiders own 3.7% of the company, worth about US$543m. Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.

What Might The Insider Transactions At Applied Optoelectronics Tell Us?

Insiders haven't bought Applied Optoelectronics stock in the last three months, but there was some selling. Despite some insider buying, the longer term picture doesn't make us feel much more positive. It is good to see high insider ownership, but the insider selling leaves us cautious. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Applied Optoelectronics. To help with this, we've discovered 3 warning signs (2 are potentially serious!) that you ought to be aware of before buying any shares in Applied Optoelectronics.

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 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.