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Insiders who sold US$1.1m worth of Cognizant Technology Solutions Corporation (NASDAQ:CTSH) stock last year were handsomely rewarded

Even though Cognizant Technology Solutions Corporation (NASDAQ:CTSH) stock gained 4.5% last week, insiders who sold US$1.1m worth of stock over the past year are probably better off. Holding on to stock would have meant their investment would be worth less now than it was at the time of sale. Thus selling at an average price of US$76.23, which is higher than the current price, may have been the best decision.

While insider transactions are not the most important thing when it comes to long-term investing, we would consider it foolish to ignore insider transactions altogether.

Check out our latest analysis for Cognizant Technology Solutions

Cognizant Technology Solutions Insider Transactions Over The Last Year

In the last twelve months, the biggest single sale by an insider was when the insider, Andrew Stafford, sold US$453k worth of shares at a price of US$77.24 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$59.75. So it may not tell us anything about how insiders feel about the current share price.

Cognizant Technology Solutions insiders didn't buy any shares over the last year. The chart below shows insider transactions (by companies and individuals) over the last year. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

insider-trading-volume
insider-trading-volume

For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

Insiders At Cognizant Technology Solutions Have Sold Stock Recently

Over the last three months, we've seen significant insider selling at Cognizant Technology Solutions. In total, Independent Director Leo Mackay dumped US$174k worth of shares in that time, and we didn't record any purchases whatsoever. This may suggest that some insiders think that the shares are not cheap.

Insider Ownership Of Cognizant Technology Solutions

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. It appears that Cognizant Technology Solutions insiders own 0.1% of the company, worth about US$42m. We've certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.

What Might The Insider Transactions At Cognizant Technology Solutions Tell Us?

An insider sold Cognizant Technology Solutions shares recently, but they didn't buy any. And even if we look at the last year, we didn't see any purchases. But since Cognizant Technology Solutions is profitable and growing, we're not too worried by this. Insiders own shares, but we're still pretty cautious, given the history of sales. So we'd only buy after careful consideration. While we like knowing what's going on with the insider's ownership and transactions, we make sure to also consider what risks are facing a stock before making any investment decision. Case in point: We've spotted 2 warning signs for Cognizant Technology Solutions you should be aware of.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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