Yahoo Finance Palo Alto Networks Insiders Sell US$4.2m Of Stock, Possibly Signalling Caution
In the last year, many Palo Alto Networks, Inc. (NASDAQ:PANW) insiders sold a substantial stake in the company which may have sparked shareholders' attention. When analyzing insider transactions, it is usually more valuable to know whether insiders are buying versus knowing if they are selling, as the latter sends an ambiguous message. However, shareholders should take a deeper look if several insiders are selling stock over a specific time period.
Although we don't think shareholders should simply follow insider transactions, we do think it is perfectly logical to keep tabs on what insiders are doing.
View our latest analysis for Palo Alto Networks
The Last 12 Months Of Insider Transactions At Palo Alto Networks
The Independent Director, Carl Eschenbach, made the biggest insider sale in the last 12 months. That single transaction was for US$1.8m worth of shares at a price of US$237 each. So it's clear an insider wanted to take some cash off the table, even below the current price of US$340. As a general rule we consider it to be discouraging when insiders are selling below the current price, because it suggests they were happy with a lower valuation. While insider selling is not a positive sign, we can't be sure if it does mean insiders think the shares are fully valued, so it's only a weak sign. It is worth noting that this sale was only 32% of Carl Eschenbach's holding.
Insiders in Palo Alto Networks didn't buy any shares in the last year. You can see a visual depiction of insider transactions (by companies and individuals) 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!
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Insiders At Palo Alto Networks Have Sold Stock Recently
The last three months saw significant insider selling at Palo Alto Networks. In total, insiders sold US$1.4m worth of shares in that time, and we didn't record any purchases whatsoever. Overall this makes us a bit cautious, but it's not the be all and end all.
Insider Ownership Of Palo Alto Networks
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. Palo Alto Networks insiders own 0.9% of the company, currently worth about US$1.0b based on the recent share price. 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 Do The Palo Alto Networks Insider Transactions Indicate?
Insiders sold Palo Alto Networks shares recently, but they didn't buy any. Looking to the last twelve months, our data doesn't show any insider buying. But since Palo Alto Networks is profitable and growing, we're not too worried by this. It is good to see high insider ownership, but the insider selling leaves us cautious. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Palo Alto Networks. Case in point: We've spotted 3 warning signs for Palo Alto Networks you should be aware of, and 1 of these is concerning.
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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 of direct interests only, but not derivative transactions or indirect interests.
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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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