Independent Director Carl Eschenbach Sold A Bunch Of Shares In Palo Alto Networks

Some Palo Alto Networks, Inc. (NASDAQ:PANW) shareholders may be a little concerned to see that the Independent Director, Carl Eschenbach, recently sold a substantial US$3.6m worth of stock at a price of US$405 per share. That diminished their holding by a very significant 50%, which arguably implies a strong desire to reallocate capital.

See our latest analysis for Palo Alto Networks

The Last 12 Months Of Insider Transactions At Palo Alto Networks

Notably, that recent sale by Carl Eschenbach is the biggest insider sale of Palo Alto Networks shares that we've seen in the last year. So it's clear an insider wanted to take some cash off the table, even slightly below the current price of US$406. As a general rule we consider it to be discouraging when insiders are selling below the current price, because it suggests they were happy with a lower valuation. Please do note, however, that sellers may have a variety of reasons for selling, so we don't know for sure what they think of the stock price. It is worth noting that this sale was 50% of Carl Eschenbach's holding.

All up, insiders sold more shares in Palo Alto Networks than they bought, over the last year. They sold for an average price of about US$357. It's not too encouraging to see that insiders have sold at below the current price. But we wouldn't put too much weight on the insider selling. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

I will like Palo Alto Networks 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 Palo Alto Networks Boast High Insider Ownership?

For a common shareholder, it is worth checking how many shares are held by company insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. It's great to see that Palo Alto Networks insiders own 1.1% of the company, worth about US$1.4b. Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.

So What Does This Data Suggest About Palo Alto Networks Insiders?

An insider hasn't bought Palo Alto Networks stock in the last three months, but there was some selling. And our longer term analysis of insider transactions didn't bring confidence, either. But since Palo Alto Networks is profitable and growing, we're not too worried by this. It is good to see high insider ownership, but the insider selling leaves us cautious. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Palo Alto Networks. For instance, we've identified 3 warning signs for Palo Alto Networks (1 is concerning) you should be aware of.

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 of direct interests only, but not derivative transactions or indirect interests.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.