We'd be surprised if Palo Alto Networks, Inc. (NYSE:PANW) shareholders haven't noticed that the Chief Accounting Officer, Jean Compeau, recently sold US$313k worth of stock at US$347 per share. However, the silver lining is that the sale only reduced their total holding by 3.7%, so we're hesitant to read anything much into it, on its own.
Palo Alto Networks Insider Transactions Over The Last Year
The Founder, Nir Zuk, made the biggest insider sale in the last 12 months. That single transaction was for US$3.0m worth of shares at a price of US$252 each. That means that an insider was selling shares at slightly below the current price (US$363). When an insider sells below the current price, it suggests that they considered that lower price to be fair. That makes us wonder what they think of the (higher) recent valuation. While insider selling is not a positive sign, we can't be sure if it does mean insiders think the shares are fully valued, so it's only a weak sign. It is worth noting that this sale was only 1.2% of Nir Zuk's holding.
All up, insiders sold more shares in Palo Alto Networks 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!
If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.
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. Palo Alto Networks insiders own 2.3% of the company, currently worth about US$819m based on the recent share price. This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.
So What Do The Palo Alto Networks Insider Transactions Indicate?
An insider sold Palo Alto Networks shares recently, but they didn't buy any. Despite some insider buying, the longer term picture doesn't make us feel much more positive. While insiders do own a lot of shares in the company (which is good), our analysis of their transactions doesn't make us feel confident about the company. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. In terms of investment risks, we've identified 3 warning signs with Palo Alto Networks and understanding these 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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