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Should You Be Worried About Insider Transactions At Computer Programs and Systems, Inc. (NASDAQ:CPSI)?

Alvin Rowe

We often see insiders buying up shares in companies that perform well over the long term. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So shareholders might well want to know whether insiders have been buying or selling shares in Computer Programs and Systems, Inc. (NASDAQ:CPSI).

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, most countries require that the company discloses such transactions to the market.

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. 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’.

See our latest analysis for Computer Programs and Systems

Computer Programs and Systems Insider Transactions Over The Last Year

Senior Vice President of Sales Troy Rosser made the biggest insider sale in the last 12 months. That single transaction was for US$287k worth of shares at a price of US$30.34 each. So what is clear is that an insider saw fit to sell at around the current price of US$27.05. They could have a variety of motivations for selling, but it’s still not particularly encouraging to see. We generally tread carefully if insiders have been selling on market, even if they sold slightly above the current price.

Over the last year, we note insiders sold 20.37k shares worth US$619k. In total, Computer Programs and Systems insiders sold more than they bought over the last year. The sellers received a price of around US$30.38, on average. We don’t gain much confidence from insider selling near the recent share price. But we don’t put too much weight on the insider selling, since sellers could have personal reasons. 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!

NasdaqGS:CPSI Insider Trading January 10th 19

If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.

Insider Ownership of Computer Programs and Systems

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. It appears that Computer Programs and Systems insiders own 4.8% of the company, worth about US$17m. While this is a strong but not outstanding level of insider ownership, it’s enough to indicate some alignment between management and smaller shareholders.

So What Do The Computer Programs and Systems Insider Transactions Indicate?

There haven’t been any insider transactions in the last three months — that doesn’t mean much. We don’t take much encouragement from the transactions by Computer Programs and Systems insiders. The modest level of insider ownership is, at least, some comfort. 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.

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.

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 editorial-team@simplywallst.com.