We often see insiders buying up shares in companies that perform well over the long term. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So before you buy or sell Medidata Solutions Inc (NASDAQ:MDSO), you may well want to know whether insiders have been buying or selling.
What Is Insider Selling?
Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock on the market. However, most countries require that the company discloses such transactions to the market.
Insider transactions are not the most important thing when it comes to long-term investing. But equally, we would consider it foolish to ignore insider transactions altogether. As Peter Lynch said, ‘insiders might sell their shares for any number of reasons, but they buy them for only one: they think the price will rise.’
Medidata Solutions Insider Transactions Over The Last Year
In the last twelve months, the biggest single sale by an insider was when Executive Vice President of Sales Michael Pray sold US$511k worth of shares at a price of US$73.02 per share. That means that an insider was selling shares at around the current price of US$72.67. While their view may have changed since the sale, this is not a particularly positive fact. Arguably, insider selling at current prices should give us reason to reflect on whether the stock is fully valued at the moment.
In the last twelve months insiders netted US$738k for 10.00k shares sold. All up, insiders sold more shares in Medidata Solutions than they bought, over the last year. The sellers received a price of around US$73.77, on average. It’s not ideal to see that insiders have sold at around the current price of US$72.67. While some insiders have decided to take some money off the table, we wouldn’t put too much weight on this fact. You can see the insider transactions 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!
If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.
Medidata Solutions Insiders Are Selling The Stock
The last quarter saw substantial insider selling of Medidata Solutions shares. In total, Michael Pray dumped US$511k worth of shares in that time, and we didn’t record any purchases whatsoever. In light of this it’s hard to argue that all the directors think that the shares are a bargain.
Does Medidata Solutions Boast High Insider Ownership?
Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. We usually like to see fairly high levels of insider ownership. Medidata Solutions insiders own about US$160m worth of shares (which is 3.6% 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 Medidata Solutions Tell Us?
An insider sold stock recently, but they haven’t been buying. And even if we look to the last year, we didn’t see any purchases. But it is good to see that Medidata Solutions is growing earnings. Insiders own relatively few shares in the company, and when you consider the sales, we’re not particularly excited about the stock. We’d certainly think twice before buying! Of course, the future is what matters most. So if you are interested in Medidata Solutions, you should check out this free report on analyst forecasts for the company.
But note: Medidata Solutions 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.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at email@example.com.