We've lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. 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 we'll take a look at whether insiders have been buying or selling shares in Datadog, Inc. (NASDAQ:DDOG).
Do Insider Transactions Matter?
It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, such insiders must disclose their trading activities, and not trade on inside information.
Insider transactions are not the most important thing when it comes to long-term investing. But equally, we would consider it foolish to ignore insider transactions altogether. For example, a Harvard University study found that 'insider purchases earn abnormal returns of more than 6% per year.
Datadog Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider purchase was by Independent Director Dev Ittycheria for US$675k worth of shares, at about US$27.00 per share. We do like to see buying, but this purchase was made at well below the current price of US$38.21. Because it occurred at a lower valuation, it doesn't tell us much about whether insiders might find today's price attractive.
Datadog insiders may have bought shares in the last year, but they didn't sell any. The chart below shows insider transactions (by individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!
There are always plenty of stocks that insiders are buying. So if that suits your style you could check each stock one by one or you could take a look at this free list of companies. (Hint: insiders have been buying them).
Insiders at Datadog Have Bought Stock Recently
Over the last quarter, Datadog insiders have spent a meaningful amount on shares. Overall, five insiders shelled out US$2.3m for shares in the company -- and none sold. This could be interpreted as suggesting a positive outlook.
Many investors like to check how much of a company is owned by insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. Datadog insiders own about US$1.5b worth of shares (which is 14% of the company). This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.
What Might The Insider Transactions At Datadog Tell Us?
It's certainly positive to see the recent insider purchases. And an analysis of the transactions over the last year also gives us confidence. But we don't feel the same about the fact the company is making losses. When combined with notable insider ownership, these factors suggest Datadog insiders are well aligned, and quite possibly think the share price is too low. Looks promising! Therefore, you should should definitely take a look at this FREE report showing analyst forecasts for Datadog.
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.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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.
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