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 we’ll take a look at whether insiders have been buying or selling shares in Cornerstone OnDemand, Inc. (NASDAQ:CSOD).
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 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 Cornerstone OnDemand
Over the last year, we can see that the biggest insider sale was by R. C. Baker for US$204k worth of shares, at about US$40.83 per share. So it’s clear an insider wanted to take some cash off the table, even below the current price of US$46.75. Even though it doesn’t necessarily mean anything, that’s certainly not a positive sign, in our book. As a general rule we consider it to be discouraging when insiders are selling below the current price. It is worth noting that this sale was only 31.3% of R. C. Baker’s holding. R. C. Baker was the only individual insider to sell shares in the last twelve months.
R. C. Baker ditched 9.00k shares over the year. The average price per share was US$42.61. You can see a visual depiction of insider transactions over the last 12 months, below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.
Insider Ownership of Cornerstone OnDemand
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. We usually like to see fairly high levels of insider ownership. It’s great to see that Cornerstone OnDemand insiders own 8.5% of the company, worth about US$249m. Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.
What Might The Insider Transactions At Cornerstone OnDemand Tell Us?
The fact that there have been no Cornerstone OnDemand insider transactions recently certainly doesn’t bother us. It’s heartening that insiders own plenty of stock, but we’d like to see more insider buying, since the last year of Cornerstone OnDemand insider transactions don’t fill us with confidence. Of course, the future is what matters most. So if you are interested in Cornerstone OnDemand, you should check out this free report on analyst forecasts for the company.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting 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.