As DXC Technology Company (NYSE:DXC) drops to US$8.7b market cap, insiders might rethink their US$899k stock purchase earlier this year

The recent 3.3% drop in DXC Technology Company's (NYSE:DXC) stock could come as a blow to insiders who purchased US$899k worth of stock at an average buy price of US$38.72 over the past 12 months. This is not good as insiders invest based on expectations that their money will appreciate over time. However, as a result of recent losses, their original investment is now worth only US$827k.

While insider transactions are not the most important thing when it comes to long-term investing, we do think it is perfectly logical to keep tabs on what insiders are doing.

See our latest analysis for DXC Technology

The Last 12 Months Of Insider Transactions At DXC Technology

The Independent Director Raul Fernandez made the biggest insider purchase in the last 12 months. That single transaction was for US$420k worth of shares at a price of US$38.86 each. That means that even when the share price was higher than US$35.62 (the recent price), an insider wanted to purchase shares. It's very possible they regret the purchase, but it's more likely they are bullish about the company. We always take careful note of the price insiders pay when purchasing shares. As a general rule, we feel more positive about a stock when an insider has bought shares at above current prices, because that suggests they viewed the stock as good value, even at a higher price. The only individual insider to buy over the last year was Raul Fernandez.

Raul Fernandez bought 23.22k shares over the last 12 months at an average price of US$38.72. 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 always plenty of stocks that insiders are buying. So if that suits your style you could check each stock one by one or you could take a look at this free list of companies. (Hint: insiders have been buying them).

Insiders at DXC Technology Have Sold Stock Recently

Over the last three months, we've seen significant insider selling at DXC Technology. In total, Executive VP & General Counsel William Deckelman dumped US$134k 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.

Insider Ownership of DXC Technology

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. Insiders own 1.0% of DXC Technology shares, worth about US$88m. 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 DXC Technology Insider Transactions Indicate?

An insider sold DXC Technology shares recently, but they didn't buy any. But we take heart from prior transactions. And insiders do own shares. So we're not overly bothered by recent selling. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. You'd be interested to know, that we found 1 warning sign for DXC Technology and we suggest you have a look.

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, but not derivative transactions.

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.