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 Upland Software, Inc. (NASDAQ:UPLD).
What Is Insider Buying?
It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, most countries require that the company discloses such transactions to the market.
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 Upland Software
President & COO Timothy Mattox made the biggest insider sale in the last 12 months. That single transaction was for US$1.6m worth of shares at a price of US$40.27 each. So it’s clear an insider wanted to take some cash off the table, even slightly below the current price of US$40.55. Even though it doesn’t necessarily mean anything, that’s certainly not a positive sign, in our book. We generally consider it a negative if insiders have been selling on market, especially if they did so below the current price. We note that the biggest single sale was only 11% of Timothy Mattox’s holding.
In the last twelve months insiders netted US$1.7m for 41.84k shares sold. Over the last year we saw more insider selling of Upland Software shares, than buying. The average sell price was around US$40.00. We don’t gain much confidence from insider selling near the recent share price. While some insiders have decided to take some money off the table, we wouldn’t put too much weight on this fact. You can see a visual depiction of insider transactions (by individuals) over the last 12 months, below. By clicking on the graph below, you can see the precise details of each insider transaction!
I will like Upland Software better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
Upland Software Insiders Are Selling The Stock
The last three months saw significant insider selling at Upland Software. In total, Timothy Mattox sold US$1.6m 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.
Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. We usually like to see fairly high levels of insider ownership. Upland Software insiders own about US$106m worth of shares (which is 12% of the company). Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.
So What Does This Data Suggest About Upland Software Insiders?
An insider sold stock recently, but they haven’t been buying. And even if we look to the last year, we didn’t see any purchases. While insiders do own a lot of shares in the company (which is good), our analysis of their transactions doesn’t make us feel confident about the company. Of course, the future is what matters most. So if you are interested in Upland Software, you should check out this free report on analyst forecasts for the company.
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.
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