Have Insiders Been Buying ServiceSource International, Inc. (NASDAQ:SREV) Shares?

We often see insiders buying up shares in companies that perform well over the long term. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So shareholders might well want to know whether insiders have been buying or selling shares in ServiceSource International, Inc. (NASDAQ:SREV).

Do Insider Transactions Matter?

It's quite normal to see company insiders, such as board members, trading in company stock, from time to time. 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 it is perfectly logical to keep tabs on what insiders are doing. 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'.

See our latest analysis for ServiceSource International

The Last 12 Months Of Insider Transactions At ServiceSource International

Over the last year, we can see that the biggest insider purchase was by Executive Chairman & CEO Gary Moore for US$102k worth of shares, at about US$1.31 per share. That implies that an insider found the current price of US$1.61 per share to be enticing. Of course they may have changed their mind. But this suggests they are optimistic. While we always like to see insider buying, it's less meaningful if the purchases were made at much lower prices, as the opportunity they saw may have passed. In this case we're pleased to report that the insider purchases were made at close to current prices.

Happily, we note that in the last year insiders paid US$285k for 189.62k shares. On the other hand they divested 49.56k shares, for US$70k. In the last twelve months there was more buying than selling by ServiceSource International insiders. Their average price was about US$1.50. It's great to see insiders putting their own cash into the company's stock, albeit at below the recent share price. The chart below shows insider transactions (by companies and individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of growing companies that insiders are buying.

ServiceSource International Insiders Are Selling The Stock

We have seen a bit of insider selling at ServiceSource International, over the last three months. Executive VP of Global Client Delivery Michael Naughton sold just US$33k worth of shares in that time. It's not great to see insider selling, nor the lack of recent buyers. But the amount sold isn't enough for us to put any weight on it.

Insider Ownership

Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Our data suggests ServiceSource International insiders own 2.3% of the company, worth about US$3.6m. I generally like to see higher levels of ownership.

So What Does This Data Suggest About ServiceSource International Insiders?

While there has not been any insider buying in the last three months, there has been selling. However, the sales are not big enough to concern us at all. On a brighter note, the transactions over the last year are encouraging. The transactions are fine but it'd be more encouraging if ServiceSource International insiders bought more shares in the company. While we like knowing what's going on with the insider's ownership and transactions, we make sure to also consider what risks are facing a stock before making any investment decision. In terms of investment risks, we've identified 1 warning sign with ServiceSource International and understanding it should be part of your investment process.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.

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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