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Possible Bearish Signals With Cadence Design Systems Insiders Disposing Stock

Simply Wall St ·  11/03/2023 20:49

In the last year, many Cadence Design Systems, Inc. (NASDAQ:CDNS) insiders sold a substantial stake in the company which may have sparked shareholders' attention. When evaluating insider transactions, knowing whether insiders are buying versus if they selling is usually more beneficial, as the latter can be open to many interpretations. However, if numerous insiders are selling, shareholders should investigate more.

While insider transactions are not the most important thing when it comes to long-term investing, logic dictates you should pay some attention to whether insiders are buying or selling shares.

View our latest analysis for Cadence Design Systems

Cadence Design Systems Insider Transactions Over The Last Year

Over the last year, we can see that the biggest insider sale was by the Independent Director, Alberto Sangiovanni-Vincentelli, for US$2.0m worth of shares, at about US$230 per share. That means that an insider was selling shares at slightly below the current price (US$244). When an insider sells below the current price, it suggests that they considered that lower price to be fair. That makes us wonder what they think of the (higher) recent valuation. However, while insider selling is sometimes discouraging, it's only a weak signal. This single sale was just 11% of Alberto Sangiovanni-Vincentelli's stake.

Insiders in Cadence Design Systems didn't buy any shares in the last year. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

insider-trading-volume
NasdaqGS:CDNS Insider Trading Volume November 3rd 2023

I will like Cadence Design Systems better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.

Cadence Design Systems Insiders Are Selling The Stock

The last quarter saw substantial insider selling of Cadence Design Systems shares. In total, Independent Director Alberto Sangiovanni-Vincentelli dumped US$3.0m 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.

Does Cadence Design Systems Boast High Insider Ownership?

Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. I reckon it's a good sign if insiders own a significant number of shares in the company. Cadence Design Systems insiders own 0.9% of the company, currently worth about US$620m based on the recent share price. This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.

So What Does This Data Suggest About Cadence Design Systems Insiders?

An insider sold Cadence Design Systems shares recently, but they didn't buy any. And even if we look at the last year, we didn't see any purchases. But it is good to see that Cadence Design Systems is growing earnings. The company boasts high insider ownership, but we're a little hesitant, given the history of share sales. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Cadence Design Systems. To assist with this, we've discovered 1 warning sign that you should run your eye over to get a better picture of Cadence Design Systems.

Of course Cadence Design Systems may not be the best stock to buy. So you may wish to see this free collection of high quality companies.

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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