Possible bearish signals as Paycom Software, Inc. (NYSE:PAYC) insiders disposed of US$2.7m worth of stock

The fact that multiple Paycom Software, Inc. (NYSE:PAYC) insiders offloaded a considerable amount of shares over the past year could have raised some eyebrows amongst investors. Knowing whether insiders are buying is usually more helpful when evaluating insider transactions, as insider selling can have various explanations. However, if numerous insiders are selling, shareholders should investigate more.

Although we don't think shareholders should simply follow insider transactions, we do think it is perfectly logical to keep tabs on what insiders are doing.

View our latest analysis for Paycom Software

Paycom Software Insider Transactions Over The Last Year

The Lead Independent Director, Frederick Peters, made the biggest insider sale in the last 12 months. That single transaction was for US$2.2m worth of shares at a price of US$435 each. So it's clear an insider wanted to take some cash off the table, even below the current price of US$469. As a general rule we consider it to be discouraging when insiders are selling below the current price, because it suggests they were happy with a lower valuation. Please do note, however, that sellers may have a variety of reasons for selling, so we don't know for sure what they think of the stock price. This single sale was just 24% of Frederick Peters's stake.

Insiders in Paycom Software didn't buy any shares in 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.

Insider Ownership of Paycom Software

Many investors like to check how much of a company is owned by insiders. We usually like to see fairly high levels of insider ownership. Paycom Software insiders own 17% of the company, currently worth about US$4.5b based on the recent share price. I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.

So What Do The Paycom Software Insider Transactions Indicate?

It doesn't really mean much that no insider has traded Paycom Software shares in the last quarter. While we feel good about high insider ownership of Paycom Software, we can't say the same about the selling of shares. So while it's helpful to know what insiders are doing in terms of buying or selling, it's also helpful to know the risks that a particular company is facing. Every company has risks, and we've spotted 1 warning sign for Paycom Software you should know about.

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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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.
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