It is not uncommon to see companies perform well in the years after insiders buy shares. 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 shareholders might well want to know whether insiders have been buying or selling shares in Pluralsight, Inc. (NASDAQ:PS).
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.
Insider transactions are not the most important thing when it comes to long-term investing. But logic dictates you should pay some attention to whether insiders are buying or selling shares. 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 Pluralsight
In the last twelve months, the biggest single sale by an insider was when Co-Founder & Director Frederick Onion sold US$9.3m worth of shares at a price of US$23.89 per share. That means that an insider was selling shares at around the current price of US$19.01. While their view may have changed since the sale, this is not a particularly positive fact. Arguably, insider selling at around current prices should give us reason to reflect on whether the stock is fully valued at the moment. The only individual insider seller over the last year was Frederick Onion.
You can see a visual depiction of insider transactions over the last 12 months, below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.
Pluralsight Insiders Are Selling The Stock
Over the last three months, we’ve seen notably more insider selling, than insider buying, at Pluralsight. In total, Frederick Onion sold US$9.3m worth of shares in that time. Meanwhile Chief Financial Officer James Budge bought US$17k worth, as we said above. We don’t view these transactions as a positive sign.
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. Pluralsight insiders own 7.1% of the company, currently worth about US$187m based on the recent share price. This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.
So What Do The Pluralsight Insider Transactions Indicate?
Unfortunately, there has been more insider selling of Pluralsight stock, than buying, in the last three months. And our longer term analysis of insider transactions didn’t bring confidence, either. The company boasts high insider ownership, but we’re a little hesitant, given the history of share sales. If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its future.
Of course Pluralsight may not be the best stock to buy. So you may wish to see this free collection of high quality companies.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at firstname.lastname@example.org.