We’ve lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. 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 we’ll take a look at whether insiders have been buying or selling shares in SPS Commerce, Inc. (NASDAQ:SPSC).
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.
We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. But logic dictates you should pay some attention to whether insiders are buying or selling shares. For example, a Columbia University study found that ‘insiders are more likely to engage in open market purchases of their own company’s stock when the firm is about to reveal new agreements with customers and suppliers’.
SPS Commerce Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider sale was by the President, Archie Black, for US$855k worth of shares, at about US$108 per share. That means that an insider was selling shares at around the current price of US$101. While we don’t usually like to see insider selling, it’s more concerning if the sales take price at a lower price. We note that this sale took place at around the current price, so it isn’t a major concern, though it’s hardly a good sign.
We note that in the last year insiders divested 26980 shares for a total of US$2.6m. In the last year SPS Commerce insiders didn’t buy any company stock. You can see a visual depiction of insider transactions (by 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!
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 SPS Commerce Have Sold Stock Recently
The last quarter saw substantial insider selling of SPS Commerce shares. In total, Archie Black dumped US$855k worth of shares in that time, and we didn’t record any purchases whatsoever. This may suggest that some insiders think that the shares are not cheap.
Insider Ownership of SPS Commerce
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. We usually like to see fairly high levels of insider ownership. SPS Commerce insiders own about US$10m worth of shares. That equates to 0.6% 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.
So What Do The SPS Commerce Insider Transactions Indicate?
An insider sold SPS Commerce shares recently, but they didn’t buy any. Looking to the last twelve months, our data doesn’t show any insider buying. But since SPS Commerce is profitable and growing, we’re not too worried by this. 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 SPS Commerce.
But note: SPS Commerce 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.
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If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.