With CS Disco, Inc.'s (NYSE:LAW)) price down 10% this week, insiders might find some solace having sold US$47m worth of shares earlier this year.

By
Simply Wall St
Published
February 21, 2022
NYSE:LAW
Source: Shutterstock

Over the past year, insiders sold US$47m worth of CS Disco, Inc. (NYSE:LAW) stock at an average price of US$51.28 per share allowing them to get the most out of their money. The company's market valuation decreased by US$214m after the stock price dropped 10% over the past week, but insiders were spared from painful losses.

While insider transactions are not the most important thing when it comes to long-term investing, we would consider it foolish to ignore insider transactions altogether.

Check out our latest analysis for CS Disco

CS Disco Insider Transactions Over The Last Year

In the last twelve months, the biggest single sale by an insider was when the Co-Founder, Kiwi Camara, sold US$36m worth of shares at a price of US$51.28 per share. We generally don't like to see insider selling, but the lower the sale price, the more it concerns us. It's of some comfort that this sale was conducted at a price well above the current share price, which is US$32.67. So it may not shed much light on insider confidence at current levels.

Happily, we note that in the last year insiders paid US$201k for 6.27k shares. But they sold 907.87k shares for US$47m. In total, CS Disco insiders sold more than they bought over the last year. 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!

insider-trading-volume
NYSE:LAW Insider Trading Volume February 21st 2022

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).

Does CS Disco Boast High Insider Ownership?

I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with insiders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. CS Disco insiders own about US$246m worth of shares (which is 13% of the company). Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.

What Might The Insider Transactions At CS Disco Tell Us?

It doesn't really mean much that no insider has traded CS Disco shares in the last quarter. While we feel good about high insider ownership of CS Disco, we can't say the same about the selling of shares. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. When we did our research, we found 3 warning signs for CS Disco (1 doesn't sit too well with us!) that we believe deserve your full attention.

Of course CS Disco may not be the best stock to buy. So you may wish to see this free collection of high quality 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.

Discounted cash flow calculation for every stock

Simply Wall St does a detailed discounted cash flow calculation every 6 hours for every stock on the market, so if you want to find the intrinsic value of any company just search here. It’s FREE.

Make Confident Investment Decisions

Simply Wall St's Editorial Team provides unbiased, factual reporting on global stocks using in-depth fundamental analysis.
Find out more about our editorial guidelines and team.