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 ShotSpotter, Inc. (NASDAQ:SSTI).
What Is Insider Selling?
It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, most countries require that the company discloses such transactions to the market.
We don’t think shareholders should simply follow insider transactions. But logic dictates you should pay some attention to whether insiders are buying or selling shares. 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.’
ShotSpotter Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider sale was by President Ralph Clark for US$2.2m worth of shares, at about US$44.99 per share. That means that an insider was selling shares at around the current price of US$38.98. 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 saw more insider selling of ShotSpotter shares, than buying. They sold for an average price of about US$45.63. It’s not ideal to see that insiders have sold at around the current price. While some insiders have decided to take some money off the table, we wouldn’t put too much weight on this fact. The chart below shows insider transactions (by 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 are like me, then you will not want to miss this free list of growing companies that insiders are buying.
ShotSpotter Insiders Are Selling The Stock
We’ve seen more insider selling than insider buying at ShotSpotter recently. We note insiders cashed in US$4.1m worth of shares. On the flip side, Senior Vice President of Marketing & Product Strategy Robert Klepper spent US$4.8k on purchasing shares (as mentioned above). Generally this level of net selling might be considered a bit bearish.
Insider Ownership of ShotSpotter
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. It appears that ShotSpotter insiders own 17% of the company, worth about US$74m. 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 Does This Data Suggest About ShotSpotter Insiders?
Unfortunately, there has been more insider selling of ShotSpotter stock, than buying, in the last three months. Zooming out, the longer term picture doesn’t give us much comfort. While insiders do own shares, they don’t own a heap, and they have been selling. So we’d only buy after careful consideration. Therefore, you should should definitely take a look at this FREE report showing analyst forecasts for ShotSpotter.
But note: ShotSpotter 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 email@example.com. 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.