President And CEO Of Smith Micro Software Trades $4.52 Million In Company Stock

William W. Smith, Jr., President, and CEO at Smith Micro Software SMSI, made a large buy and sell of company shares on September 2, according to a new SEC filing.

What Happened: A Form 4 filing from the U.S. Securities and Exchange Commission reports that on September 2, William W. Smith, Jr. bought 850,000 Smith Micro Software shares at a price of $2.38 per share, for a total of $2,025,125. They then sold their shares on the same day in the open market at a price of $4.65 to raise a total of $2,497,050 from the sale.

They still own a total of 4,798,451 of Smith Micro Software worth, $23,944,270.

Smith Micro Software shares are trading down 0.4% at $4.99 at the time of this writing on Friday morning.

Why Insider Transactions Are Important

Insider transactions shouldn't be used primarily to make an investing decision, however, they can be an important factor for an investor to consider.

In legal terms, an "insider" refers to any shareholder who owns at least 10% of a company. This can include executives in the c-suite and large hedge funds. These insiders are required to let the public know of their transactions via a Form 4 filing, which must be filed within two business days of the transaction.

When a company insider makes a new purchase, that is an indication that they expect the stock to rise.

Insider sells, on the other hand, can be made for a variety of reasons, and may not necessarily mean that the seller thinks the stock will go down.

Important Transaction Codes

Investors prefer focusing on transactions that take place in the open market, indicated in Table I of the Form 4 filing. A P in Box 3 indicates a purchase, while S indicates a sale. Transaction code C indicates the conversion of an option, and transaction code A indicates the insider may have been forced to sell shares in order to receive compensation that had been promised upon being hired by the company.

Get more information on previous transactions.