Shareholders May Not Overlook Stem Insiders Selling US$1.7m In Stock

Stem, Inc.'s (NYSE:STEM) stock rose 22% last week, but insiders who sold US$1.7m worth of stock over the last year are probably in a more advantageous position. Selling at an average price of US$2.07, which is higher than the current price might have been the right call as holding on to stock would have meant their investment would be worth less now than it was at the time of sale.

While insider transactions are not the most important thing when it comes to long-term investing, we would consider it foolish to ignore insider transactions altogether.

View our latest analysis for Stem

The Last 12 Months Of Insider Transactions At Stem

Over the last year, we can see that the biggest insider sale was by the insider, John Carrington, for US$359k worth of shares, at about US$1.85 per share. We generally don't like to see insider selling, but the lower the sale price, the more it concerns us. The good news is that this large sale was at well above current price of US$0.66. So it is hard to draw any strong conclusion from it.

Happily, we note that in the last year insiders paid US$378k for 209.10k shares. On the other hand they divested 828.74k shares, for US$1.7m. All up, insiders sold more shares in Stem than they bought, over the last year. The chart below shows insider transactions (by companies and individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!

If you are like me, then you will not want to miss this free list of small cap stocks that are not only being bought by insiders but also have attractive valuations.

Insider Ownership Of Stem

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. Our data suggests Stem insiders own 4.2% of the company, worth about US$4.4m. I generally like to see higher levels of ownership.

So What Do The Stem Insider Transactions Indicate?

The fact that there have been no Stem insider transactions recently certainly doesn't bother us. We don't take much encouragement from the transactions by Stem insiders. And usually insiders own more stock in the company, according to our data. 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. To that end, you should learn about the 3 warning signs we've spotted with Stem (including 2 which shouldn't be ignored).

If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, that have HIGH return on equity 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.

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.