Docebo Inc.'s (TSE:DCBO)) market cap declines to CA$2.2b but insiders who sold US$269m stock were able to hedge their losses

By
Simply Wall St
Published
January 10, 2022
TSX:DCBO
Source: Shutterstock

Insiders at Docebo Inc. (TSE:DCBO) sold US$269m worth of stock at an average price of US$79.27 a share over the past year, making the most of their investment. The company's market valuation decreased by CA$578m after the stock price dropped 21% over the past week, but insiders were spared from painful losses.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we do think it is perfectly logical to keep tabs on what insiders are doing.

View our latest analysis for Docebo

Docebo Insider Transactions Over The Last Year

Over the last year, we can see that the biggest insider sale was by the Independent Chair of the Board, Jason Chapnik, for CA$132m worth of shares, at about CA$63.12 per share. That means that even when the share price was below the current price of CA$67.09, 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 12% of Jason Chapnik's stake.

Happily, we note that in the last year insiders paid CA$897k for 18.18k shares. But they sold 3.39m shares for CA$269m. Over the last year we saw more insider selling of Docebo shares, than buying. 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!

insider-trading-volume
TSX:DCBO Insider Trading Volume January 10th 2022

If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.

Does Docebo 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. We usually like to see fairly high levels of insider ownership. Docebo insiders own about CA$1.2b worth of shares (which is 55% of the company). 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 Docebo Insiders?

It doesn't really mean much that no insider has traded Docebo shares in the last quarter. It's great to see high levels of insider ownership, but looking back over the last year, we don't gain confidence from the Docebo insiders selling. 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. In terms of investment risks, we've identified 1 warning sign with Docebo and understanding this should be part of your investment process.

Of course Docebo 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, but not derivative transactions.

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