Don't Ignore The Insider Selling In Pure Storage

We wouldn't blame Pure Storage, Inc. (NYSE:PSTG) shareholders if they were a little worried about the fact that Scott Dietzen, the Vice Chairman recently netted about US$7.9m selling shares at an average price of US$53.49. That sale reduced their total holding by 15% which is hardly insignificant, but far from the worst we've seen.

See our latest analysis for Pure Storage

The Last 12 Months Of Insider Transactions At Pure Storage

Notably, that recent sale by Scott Dietzen is the biggest insider sale of Pure Storage shares that we've seen in the last year. So what is clear is that an insider saw fit to sell at around the current price of US$52.32. We generally don't like to see insider selling, but the lower the sale price, the more it concerns us. In this case, the big sale took place at around the current price, so it's not too bad (but it's still not a positive).

Insiders in Pure Storage didn't buy any shares in the last year. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

I will like Pure Storage better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.

Insider Ownership

Many investors like to check how much of a company is owned by insiders. We usually like to see fairly high levels of insider ownership. It's great to see that Pure Storage insiders own 5.5% of the company, worth about US$957m. Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.

So What Does This Data Suggest About Pure Storage Insiders?

Insiders haven't bought Pure Storage 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. 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. While conducting our analysis, we found that Pure Storage has 3 warning signs and it would be unwise to ignore them.

Of course Pure Storage 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.