Over the past year, many Synopsys, Inc. (NASDAQ:SNPS) insiders sold a significant stake in the company which may have piqued investors' interest. Knowing whether insiders are buying is usually more helpful when evaluating insider transactions, as insider selling can have various explanations. However, when multiple insiders sell stock over a specific duration, shareholders should take notice as that could possibly be a red flag.
Although we don't think shareholders should simply follow insider transactions, we would consider it foolish to ignore insider transactions altogether.
The Last 12 Months Of Insider Transactions At Synopsys
In the last twelve months, the biggest single sale by an insider was when the Lead Independent Director, Roy Vallee, sold US$5.7m worth of shares at a price of US$573 per share. That means that an insider was selling shares at around the current price of US$557. While insider selling is a negative, to us, it is more negative if the shares are sold at a lower price. We note that this sale took place at around the current price, so it isn't a major concern, though it's hardly a good sign.
All up, insiders sold more shares in Synopsys 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 Synopsys better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
Synopsys Insiders Are Selling The Stock
We've seen more insider selling than insider buying at Synopsys recently. In that time, insiders dumped US$8.8m worth of shares. On the other hand we note insider Marc Casper bought US$439k worth of shares , as previously mentioned . Because the selling vastly outweighs the buying, we'd say this is a somewhat bearish sign.
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. We usually like to see fairly high levels of insider ownership. It's great to see that Synopsys insiders own 0.6% of the company, worth about US$502m. I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.
So What Does This Data Suggest About Synopsys Insiders?
The stark truth for Synopsys is that there has been more insider selling than insider buying in the last three months. Despite some insider buying, the longer term picture doesn't make us feel much more positive. But since Synopsys is profitable and growing, we're not too worried by this. The company boasts high insider ownership, but we're a little hesitant, given the history of share sales. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. Case in point: We've spotted 1 warning sign for Synopsys you should be aware of.
Of course Synopsys 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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