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We've lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. The flip side of that is that there are more than a few examples of insiders dumping stock prior to a period of weak performance. So before you buy or sell Constellation Software Inc. (TSE:CSU), you may well want to know whether insiders have been buying or selling.
What Is Insider Selling?
It's quite normal to see company insiders, such as board members, trading in company stock, from time to time. However, rules govern insider transactions, and certain disclosures are required.
We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. But it is perfectly logical to keep tabs on what insiders are doing. 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.'
The Last 12 Months Of Insider Transactions At Constellation Software
Lead Independent Director Stephen Scotchmer made the biggest insider purchase in the last 12 months. That single transaction was for CA$6.4m worth of shares at a price of CA$928 each. So it's clear an insider wanted to buy, at around the current price. Of course they may have changed their mind. But this suggests they are optimistic. In any event it's generally a positive if insiders are buying shares at around the current price. Notably Stephen Scotchmer was also the biggest seller, having sold CA$12m worth of shares.
Happily, we note that in the last year insiders paid CA$7.8m for 8.41k shares. But they sold 12.66k for CA$12m. Over the last year we saw more insider selling of Constellation Software shares, than buying. The sellers received a price of around US$936, on average. It's not particularly great to see insiders were selling shares at below recent prices. But we wouldn't put too much weight on the insider selling. The chart below shows insider transactions (by 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.
For a common shareholder, it is worth checking how many shares are held by company insiders. I reckon it's a good sign if insiders own a significant number of shares in the company. Constellation Software insiders own 7.1% of the company, currently worth about CA$1.7b 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 Constellation Software Insider Transactions Indicate?
Insider sales and purchases have netted out over the last three months, so it's hard to draw any conclusion from recent trading. It's great to see high levels of insider ownership, but looking back at the last year, we'd need to see more buying to gain confidence from the Constellation Software insider transactions. Therefore, you should should definitely take a look at this FREE report showing analyst forecasts for Constellation Software.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
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.