Lead Independent Director John Murphy Sold A Bunch Of Shares In LegalZoom.com

We'd be surprised if LegalZoom.com, Inc. (NASDAQ:LZ) shareholders haven't noticed that the Lead Independent Director, John Murphy, recently sold US$256k worth of stock at US$10.57 per share. That sale was 36% of their holding, so it does make us raise an eyebrow.

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LegalZoom.com Insider Transactions Over The Last Year

In fact, the recent sale by John Murphy was the biggest sale of LegalZoom.com shares made by an insider individual in the last twelve months, according to our records. That means that an insider was selling shares at below the current price (US$10.72). When an insider sells below the current price, it suggests that they considered that lower price to be fair. That makes us wonder what they think of the (higher) recent valuation. However, while insider selling is sometimes discouraging, it's only a weak signal. We note that the biggest single sale was only 36% of John Murphy's holding.

You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

Check out our latest analysis for LegalZoom.com

For those who like to find hidden gems this free list of small cap companies with recent insider purchasing, could be just the ticket.

Does LegalZoom.com Boast High Insider Ownership?

For a common shareholder, it is worth checking how many shares are held by company insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. LegalZoom.com insiders own about US$100m worth of shares (which is 5.2% of the company). I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.

What Might The Insider Transactions At LegalZoom.com Tell Us?

An insider sold LegalZoom.com 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 LegalZoom.com is profitable and growing, we're not too worried by this. The company boasts high insider ownership, but we're a little hesitant, given the history of share sales. 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. Case in point: We've spotted 1 warning sign for LegalZoom.com you should be aware of.

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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.