Did Nuance Communications, Inc. (NASDAQ:NUAN) Insiders Sell Shares?

We often see insiders buying up shares in companies that perform well over the long term. On the other hand, we’d be remiss not to mention that insider sales have been known to precede tough periods for a business. So shareholders might well want to know whether insiders have been buying or selling shares in Nuance Communications, Inc. (NASDAQ:NUAN).

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, rules govern insider transactions, and certain disclosures are required.

Insider transactions are not the most important thing when it comes to long-term investing. But it is perfectly logical to keep tabs on what insiders are doing. 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.’

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Nuance Communications Insider Transactions Over The Last Year

Executive VP & GM of Imaging Division Alvaro Monserrat made the biggest insider sale in the last 12 months. That single transaction was for US$321k worth of shares at a price of US$16.10 each. So what is clear is that an insider saw fit to sell at around the current price of US$15.09. They could have a variety of motivations for selling, but it’s still not particularly encouraging to see. Arguably, insider selling at around current prices should give us reason to reflect on whether the stock is fully valued at the moment.

Over the last year, we note insiders sold 35.00k shares worth US$531k. Over the last year we saw more insider selling of Nuance Communications shares, than buying. The average sell price was around US$15.17. We don’t gain much confidence from insider selling near the recent share price. Since insiders sell for many reasons, we wouldn’t put too much weight on it. You can see the insider transactions (by individuals) over the last year depicted in the chart below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

NasdaqGS:NUAN Insider Trading January 11th 19
NasdaqGS:NUAN Insider Trading January 11th 19

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Insiders at Nuance Communications Have Sold Stock Recently

The last three months saw significant insider selling at Nuance Communications. In total, Alvaro Monserrat dumped US$321k 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 Nuance Communications Boast High Insider Ownership?

For a common shareholder, it is worth checking how many shares are held by company insiders. I reckon it’s a good sign if insiders own a significant number of shares in the company. Nuance Communications insiders own about US$27m worth of shares. That equates to 0.7% of the company. While this is a strong but not outstanding level of insider ownership, it’s enough to indicate some alignment between management and smaller shareholders.

What Might The Insider Transactions At Nuance Communications Tell Us?

An insider hasn’t bought Nuance Communications stock in the last three months, but there was some selling. And even if we look to the last year, we didn’t see any purchases. While insiders do own shares, they don’t own a heap, and they have been selling. We’d think twice before buying! Therefore, you should should definitely take a look at this FREE report showing analyst forecasts for Nuance Communications.

Of course Nuance Communications may not be the best stock to buy. So you may wish to see this free collection of high quality companies.

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 editorial-team@simplywallst.com.