While it's been a great week for HashiCorp, Inc. (NASDAQ:HCP) shareholders after stock gained 15%, they should consider it with a grain of salt. The fact that insiders chose to dispose of US$2.7m worth of stock in the past 12 months even though prices were relatively low could be indicative of some anticipated weakness.
While insider transactions are not the most important thing when it comes to long-term investing, we do think it is perfectly logical to keep tabs on what insiders are doing.
See our latest analysis for HashiCorp
HashiCorp Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider sale was by the Co-Founder, Armon Dadgar, for US$984k worth of shares, at about US$25.90 per share. That means that an insider was selling shares at around the current price of US$24.15. While insider selling is a negative, to us, it is more negative if the shares are sold at a lower price. In this case, the big sale took place at around the current price, so it's not too bad (but it's still not a positive).
In total, HashiCorp insiders sold more than they bought over the last year. You can see a visual depiction of insider transactions (by companies and individuals) 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!
I will like HashiCorp better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
Insiders At HashiCorp Have Sold Stock Recently
The last quarter saw substantial insider selling of HashiCorp shares. Specifically, Chief Marketing & Business Operations Officer Marc Holmes ditched US$148k worth of shares in that time, and we didn't record any purchases whatsoever. In light of this it's hard to argue that all the insiders think that the shares are a bargain.
Insider Ownership
I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with insiders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. It's great to see that HashiCorp insiders own 12% of the company, worth about US$573m. 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 HashiCorp Tell Us?
An insider sold HashiCorp shares recently, but they didn't buy any. Despite some insider buying, the longer term picture doesn't make us feel much more positive. It is good to see high insider ownership, but the insider selling leaves us cautious. So while it's helpful to know what insiders are doing in terms of buying or selling, it's also helpful to know the risks that a particular company is facing. While conducting our analysis, we found that HashiCorp has 2 warning signs and it would be unwise to ignore them.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting 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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.