Despite low prices, Commvault Systems, Inc. (NASDAQ:CVLT) insiders sold US$3.9m worth of shares last year probably anticipating weakness

By
Simply Wall St
Published
September 18, 2021
NasdaqGS:CVLT
Source: Shutterstock

Commvault Systems, Inc.'s (NASDAQ:CVLT) stock price has dropped 5.2% in the previous week, but insiders who sold US$3.9m in stock over the past year have had less luck. Insiders would probably have been better off holding on to their shares given that the average selling price of US$68.90 is still lower than the current share price.

Although we don't think shareholders should simply follow insider transactions, we do think it is perfectly logical to keep tabs on what insiders are doing.

Check out our latest analysis for Commvault Systems

Commvault Systems Insider Transactions Over The Last Year

In the last twelve months, the biggest single sale by an insider was when the VP & CFO, Brian Carolan, sold US$1.9m worth of shares at a price of US$63.99 per share. That means that even when the share price was below the current price of US$74.03, an insider wanted to cash in some shares. We generally consider it a negative if insiders have been selling, especially if they did so below the current price, because it implies that they considered a lower price to be reasonable. However, while insider selling is sometimes discouraging, it's only a weak signal. This single sale was just 37% of Brian Carolan's stake.

Insiders in Commvault Systems didn't buy any shares in 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!

insider-trading-volume
NasdaqGS:CVLT Insider Trading Volume September 18th 2021

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

Insiders at Commvault Systems Have Sold Stock Recently

The last three months saw significant insider selling at Commvault Systems. In total, Chief of Business Operations Gary Merrill dumped US$87k 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 insiders think that the shares are a bargain.

Insider Ownership

For a common shareholder, it is worth checking how many shares are held by company insiders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Commvault Systems insiders own about US$48m worth of shares. That equates to 1.4% of the company. 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 Commvault Systems Insider Transactions Indicate?

An insider sold stock recently, but they haven't been buying. And there weren't any purchases to give us comfort, over the last year. Insiders own shares, but we're still pretty cautious, given the history of sales. We'd practice some caution before buying! While we like knowing 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. At Simply Wall St, we found 1 warning sign for Commvault Systems that deserve your attention before buying any shares.

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, but not derivative transactions.

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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.
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