It is not uncommon to see companies perform well in the years after insiders buy shares. On the other hand, we'd be remiss not to mention that insider sales have been known to precede tough periods for a business. So shareholders might well want to know whether insiders have been buying or selling shares in Benefitfocus, Inc. (NASDAQ:BNFT).
What Is Insider Selling?
Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock in the company. However, such insiders must disclose their trading activities, and not trade on inside information.
We don't think shareholders should simply follow insider transactions. But logic dictates you should pay some attention to whether insiders are buying or selling shares. For example, a Columbia University study found that 'insiders are more likely to engage in open market purchases of their own company’s stock when the firm is about to reveal new agreements with customers and suppliers'.
The Last 12 Months Of Insider Transactions At Benefitfocus
Over the last year, we can see that the biggest insider sale was by the Chief Technology Officer, James Restivo, for US$411k worth of shares, at about US$49.68 per share. While insider selling is a negative, to us, it is more negative if the shares are sold at a lower price. It's of some comfort that this sale was conducted at a price well above the current share price, which is US$26.39. So it may not shed much light on insider confidence at current levels.
All up, insiders sold more shares in Benefitfocus than they bought, over the last year. You can see the insider transactions (by individuals) over the last year depicted in the chart below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
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).
Benefitfocus Insiders Bought Stock Recently
There has been significantly more insider buying, than selling, at Benefitfocus, over the last three months. Raymond August spent US$100k on stock. But Principal Financial and Accounting Officer Lou Gilmore sold shares worth US$27k. Insiders have spent more buying shares than they have selling, so on balance we think they are are probably optimistic.
Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. A high insider ownership often makes company leadership more mindful of shareholder interests. Benefitfocus insiders own about US$84m worth of shares. That equates to 9.8% of the company. 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 Does This Data Suggest About Benefitfocus Insiders?
It's certainly positive to see the recent insider purchase. However, the longer term transactions are not so encouraging. We don't take much heart from transactions by Benefitfocus insiders over the last year. But they own a reasonable amount of the company, and there was some buying recently. So they seem pretty well aligned, overall. Therefore, you should should definitely take a look at this FREE report showing analyst forecasts for Benefitfocus.
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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If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.