Investors can learn much by watching the behavior of corporate insiders as they handle positions in their own companies. People may sell shares for many reasons (such as buying a house, paying for college, or getting ready for retirement). They generally buy for only one reason: to make more money.
The chief executive officer is often one of the largest and best-informed shareholders in any company. Let’s see whether Napco Security Technologies Inc. (NASDAQ: NSSC) CEO Richard Soloway has been increasing or decreasing his shares over the past year and whether he knows something we don’t.
What You Need to Know About Napco Security
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Napco Security Technologies develops, manufactures, and sells electronic security products in the United States and internationally. The company offers access control systems, door-locking products, intrusion and fire alarm systems, and video surveillance systems for commercial, residential, institutional, industrial, and governmental applications.
Its access control systems include various types of identification readers, control panels, PC-based computers, and electronically activated door-locking devices. Its door-locking devices comprise microprocessor-based electronic door locks with push button, card readers and bio-metric operation, door alarms, mechanical door locks, and simple deadbolt locks.
The company’s alarm systems include automatic communicators, cellular communication devices, control panels, combination control panels/digital communicators and digital keypad systems, fire alarm control panels, and area detectors. Its video surveillance systems comprise video cameras, control panels, video monitors, or PCs. It also buys and resells various identification readers, video cameras, PC-based computers, and various peripheral equipment for access control and video surveillance systems. The company offers school security products, and it markets peripheral and related equipment manufactured by other companies. The company markets and sells its products to independent distributors, dealers, and installers of security equipment.
Napco Security Technologies was founded in 1969 and is headquartered in Amityville, New York. That is also the home of Bellco Generics and Sundial Brands. Competitors of Napco Security include ADT Inc. (NYSE: ADT) and Alarm.com Holding Inc. (NASDAQ: ALRM). Soloway has been CEO of Napco Security since 1998 and is also the chair of its board of directors.
The company posted almost $172.2 million in revenue and has a market capitalization of over $1.6 billion. The stock is up about 42% from a year ago, despite being well in the red late last year. The S&P 500 is around 22% higher in that time. The shares are up more than 31% year to date.
How the CEO of Napco Security Is Trading
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One year ago, Soloway owned almost 7.3 million shares, worth almost $211.3 million. Today, he owns nearly 3.7 million shares, about half of his previous stake. Parting with over 3.5 million shares reduced the value of the stake by almost 40% to over $127.6 million.
| Shares a Year Ago | Shares Today | % Change |
| 7,267,452 | 3,696,010 | −49.14% |
CEO Richard Soloway could have sold shares for a variety of reasons, and we may never know the truth. It is not hard to imagine that trimming the stake could be a sign of a lack of confidence, given the rough patch the stock went through last year. However, the quarterly report in December was better than expected. The stock has recovered and just hit an all-time high above $46 per share. And there’s little sign of insiders in general trying to get out of the way before things go off the rails.
Another internal shareholder to watch is Chief Financial Officer Kevin Buchel. He owns 0.3% or so of shares outstanding, worth almost $4.1 million. Note that one director did sell some shares late last year. (These 19 executives pay themselves over $150 million a year.)
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