Insiders at J2 Global, Inc. (NASDAQ:JCOM) sold US$22m worth of stock, a potential red flag that needs to be monitored

By
Simply Wall St
Published
August 24, 2021
NasdaqGS:ZD
Source: Shutterstock

While J2 Global, Inc. (NASDAQ:JCOM) shareholders have had a good week with the stock up 3.2%, they shouldn't let their guards down. Although prices were relatively low, insiders chose to sell US$22m worth of stock in the past 12 months. This could be a sign of impending weakness.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, logic dictates you should pay some attention to whether insiders are buying or selling shares.

View our latest analysis for J2 Global

The Last 12 Months Of Insider Transactions At J2 Global

The Independent Chairman, Richard Ressler, made the biggest insider sale in the last 12 months. That single transaction was for US$20m worth of shares at a price of US$98.53 each. So it's clear an insider wanted to take some cash off the table, even below the current price of US$134. 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. This single sale was just 17% of Richard Ressler's stake.

In the last year J2 Global insiders didn't buy any company stock. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

insider-trading-volume
NasdaqGS:JCOM Insider Trading Volume August 25th 2021

I will like J2 Global better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.

Insiders at J2 Global Have Sold Stock Recently

The last quarter saw substantial insider selling of J2 Global shares. Specifically, Independent Director Douglas Bech ditched US$384k worth of shares in that time, and we didn't record any purchases whatsoever. Overall this makes us a bit cautious, but it's not the be all and end all.

Does J2 Global Boast High Insider Ownership?

I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with 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. It's great to see that J2 Global insiders own 4.8% of the company, worth about US$304m. This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.

What Might The Insider Transactions At J2 Global Tell Us?

An insider sold stock recently, but they haven't been buying. Looking to the last twelve months, our data doesn't show any insider buying. But it is good to see that J2 Global is growing earnings. It is good to see high insider ownership, but the insider selling leaves us cautious. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. At Simply Wall St, we found 2 warning signs for J2 Global that deserve your attention before buying any shares.

But note: J2 Global 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.

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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