65% Of This Computershare Insider's Holdings Were Sold

Viewing insider transactions for Computershare Limited's (ASX:CPU ) over the last year, we see that insiders were net sellers. This means that a larger number of shares were sold by insiders in relation to shares purchased.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we would consider it foolish to ignore insider transactions altogether.

View our latest analysis for Computershare

Computershare Insider Transactions Over The Last Year

In the last twelve months, the biggest single sale by an insider was when the CEO, President & Executive Director, Stuart Irving, sold AU$7.0m worth of shares at a price of AU$25.80 per share. That means that even when the share price was below the current price of AU$28.43, an insider wanted to cash in some shares. As a general rule we consider it to be discouraging when insiders are selling below the current price, because it suggests they were happy with a lower valuation. 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. It is worth noting that this sale was 65% of Stuart Irving's holding. The only individual insider seller over the last year was Stuart Irving.

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 Computershare better if I see some big insider buys. While we wait, check out this free list of undervalued and small cap stocks with considerable, recent, insider buying.

Computershare Insiders Bought Stock Recently

Over the last quarter, Computershare insiders have spent a meaningful amount on shares. We can see that Independent Non-Executive Director Gerrard Schmid paid AU$151k for shares in the company. No-one sold. This could be interpreted as suggesting a positive outlook.

Insider Ownership Of Computershare

Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. I reckon it's a good sign if insiders own a significant number of shares in the company. It's great to see that Computershare insiders own 4.2% of the company, worth about AU$711m. I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.

So What Do The Computershare Insider Transactions Indicate?

It is good to see the recent insider purchase. But we can't say the same for the transactions over the last 12 months. Overall, we'd prefer see a more sustained buying from directors, but with a significant insider holding and more recent purchases, Computershare insiders are reasonably well aligned, and optimistic for the future. 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. Every company has risks, and we've spotted 2 warning signs for Computershare you should know about.

But note: Computershare may not be the best stock to buy. So take a peek at this free list of interesting companies with high ROE and low debt.

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.

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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.