We've lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. The flip side of that is that there are more than a few examples of insiders dumping stock prior to a period of weak performance. So we'll take a look at whether insiders have been buying or selling shares in NortonLifeLock Inc. (NASDAQ:NLOK).
Do Insider Transactions Matter?
Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock in the company. 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'.
NortonLifeLock Insider Transactions Over The Last Year
In the last twelve months, the biggest single sale by an insider was when the insider, Matthew Brown, sold US$715k worth of shares at a price of US$22.63 per share. So what is clear is that an insider saw fit to sell at around the current price of US$20.23. While insider selling is a negative, to us, it is more negative if the shares are sold at a lower price. Given that the sale took place at around current prices, it makes us a little cautious but is hardly a major concern.
NortonLifeLock insiders didn't buy any shares over the last year. The chart below shows insider transactions (by companies and individuals) over the last year. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
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).
NortonLifeLock Insiders Are Selling The Stock
The last three months saw some NortonLifeLock insider selling. CFO & Principal Accounting Officer Natalie Derse only netted US$28k selling shares, in that period. Neither the lack of buying nor the presence of selling is heartening. But the amount sold isn't enough for us to put any weight on it.
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. A high insider ownership often makes company leadership more mindful of shareholder interests. Insiders own 0.8% of NortonLifeLock shares, worth about US$99m. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.
What Might The Insider Transactions At NortonLifeLock Tell Us?
We did not see any insider buying in the last three months, but we did see selling. However, the sales are not big enough to concern us at all. Recent sales exacerbate our caution arising from analysis of NortonLifeLock insider transactions. But we do like the fact that insiders own a fair chunk of the company. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing NortonLifeLock. Every company has risks, and we've spotted 4 warning signs for NortonLifeLock (of which 3 don't sit too well with us!) you should know about.
But note: NortonLifeLock 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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