Descartes Systems Group Insiders Sell US$1.9m Of Stock, Possibly Signalling Caution

In the last year, many The Descartes Systems Group Inc. (TSE:DSG) insiders sold a substantial stake in the company which may have sparked shareholders' attention. When analyzing insider transactions, it is usually more valuable to know whether insiders are buying versus knowing if they are selling, as the latter sends an ambiguous message. However, when multiple insiders sell stock over a specific duration, shareholders should take notice as that could possibly be a red flag.

Although we don't think shareholders should simply follow insider transactions, logic dictates you should pay some attention to whether insiders are buying or selling shares.

See our latest analysis for Descartes Systems Group

Descartes Systems Group Insider Transactions Over The Last Year

In the last twelve months, the biggest single sale by an insider was when the Non-Executive Independent Chairman, Eric Demirian, sold CA$1.2m worth of shares at a price of CA$128 per share. That means that an insider was selling shares at slightly below the current price (CA$157). 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. While insider selling is not a positive sign, we can't be sure if it does mean insiders think the shares are fully valued, so it's only a weak sign. It is worth noting that this sale was 90% of Eric Demirian's holding.

Insiders in Descartes Systems Group didn't buy any shares in the last year. The chart below shows insider transactions (by companies and individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

If you like to buy stocks that insiders are buying, rather than selling, then you might just love this free list of companies. (Hint: Most of them are flying under the radar).

Descartes Systems Group Insiders Are Selling The Stock

Over the last three months, we've seen significant insider selling at Descartes Systems Group. In total, Executive Vice President of Product Management Kenneth Wood dumped CA$733k worth of shares in that time, and we didn't record any purchases whatsoever. This may suggest that some insiders think that the shares are not cheap.

Insider Ownership Of Descartes Systems Group

Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. I reckon it's a good sign if insiders own a significant number of shares in the company. Insiders own 0.3% of Descartes Systems Group shares, worth about CA$43m. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.

So What Do The Descartes Systems Group Insider Transactions Indicate?

An insider sold Descartes Systems Group shares recently, but they didn't buy any. And even if we look at the last year, we didn't see any purchases. But since Descartes Systems Group is profitable and growing, we're not too worried by this. Insider ownership isn't particularly high, so this analysis makes us cautious about the company. We'd practice some caution before buying! In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Descartes Systems Group. For example - Descartes Systems Group has 1 warning sign we think you should be aware of.

But note: Descartes Systems Group 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.