Insider Sellers Might Regret Selling System1 Shares at a Lower Price Than Current Market Value

System1, Inc.'s (NYSE:SST) value has fallen 11% in the last week, but insiders who sold US$8.3m worth of stock over the last year have had less success. Insiders would probably have been better off holding on to their shares given that the average selling price of US$1.50 is still lower than the current share price.

While insider transactions are not the most important thing when it comes to long-term investing, we do think it is perfectly logical to keep tabs on what insiders are doing.

View our latest analysis for System1

System1 Insider Transactions Over The Last Year

Over the last year, we can see that the biggest insider sale was by the CEO & Chairman, Michael Blend, for US$7.2m worth of shares, at about US$1.50 per share. While we don't usually like to see insider selling, it's more concerning if the sales take place at a lower price. It's of some comfort that this sale was conducted at a price well above the current share price, which is US$1.09. So it may not shed much light on insider confidence at current levels. The only individual insider seller over the last year was Michael Blend. Notably Michael Blend was also the biggest buyer, having purchased US$1.2m worth of shares.

Michael Blend divested 5.50m shares over the last 12 months at an average price of US$1.50. 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!

I will like System1 better if I see some big insider buys. While we wait, check out this free list of undervalued and small cap stocks with considerable, recent, insider buying.

Does System1 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. I reckon it's a good sign if insiders own a significant number of shares in the company. Insiders own 23% of System1 shares, worth about US$23m. 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 Does This Data Suggest About System1 Insiders?

It doesn't really mean much that no insider has traded System1 shares in the last quarter. Our analysis of System1 insider transactions leaves us cautious. But we do like the fact that insiders own a fair chunk of the company. 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. When we did our research, we found 2 warning signs for System1 (1 shouldn't be ignored!) that we believe deserve your full attention.

Of course System1 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 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.