How Much Are SolarWinds Corporation (NYSE:SWI) Insiders Taking Off The Table?

By
Simply Wall St
Published
May 24, 2021
NYSE:SWI
Source: Shutterstock

We often see insiders buying up shares in companies that perform well over the long term. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So before you buy or sell SolarWinds Corporation (NYSE:SWI), you may well want to know whether insiders have been buying or selling.

What Is Insider Buying?

It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, rules govern insider transactions, and certain disclosures are required.

We don't think shareholders should simply follow insider transactions. But equally, we would consider it foolish to ignore insider transactions altogether. 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'.

View our latest analysis for SolarWinds

The Last 12 Months Of Insider Transactions At SolarWinds

In the last twelve months, the biggest single sale by an insider was when the insider, Kevin Thompson, sold US$7.0m worth of shares at a price of US$19.52 per share. We generally don't like to see insider selling, but the lower the sale price, the more it concerns us. The good news is that this large sale was at well above current price of US$16.99. So it is hard to draw any strong conclusion from it.

Insiders in SolarWinds didn't buy any shares in the last year. The chart below shows insider transactions (by companies and individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!

insider-trading-volume
NYSE:SWI Insider Trading Volume May 25th 2021

I will like SolarWinds better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.

Does SolarWinds Boast High Insider Ownership?

Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. A high insider ownership often makes company leadership more mindful of shareholder interests. Insiders own 1.1% of SolarWinds shares, worth about US$57m. We've certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.

So What Do The SolarWinds Insider Transactions Indicate?

The fact that there have been no SolarWinds insider transactions recently certainly doesn't bother us. We don't take much encouragement from the transactions by SolarWinds insiders. But we do like the fact that insiders own a fair chunk of 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. For example, SolarWinds has 3 warning signs (and 2 which are a bit unpleasant) we think you should know about.

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.

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