Yahoo Finance Need To Know: Palo Alto Networks, Inc. (NYSE:PANW) Insiders Have Been Buying Shares
We often see insiders buying up shares in companies that perform well over the long term. 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 Palo Alto Networks, Inc. (NYSE:PANW).
Do Insider Transactions Matter?
It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. 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 logic dictates you should pay some attention to whether insiders are buying or selling shares. For example, a Columbia University study found that 'insiders are more likely to engage in open market purchases of their own company’s stock when the firm is about to reveal new agreements with customers and suppliers'.
View our latest analysis for Palo Alto Networks
The Last 12 Months Of Insider Transactions At Palo Alto Networks
In the last twelve months, the biggest single purchase by an insider was when CEO & Chairman Nikesh Arora bought US$5.5m worth of shares at a price of US$222 per share. That means that even when the share price was higher than US$164 (the recent price), an insider wanted to purchase shares. While their view may have changed since the purchase was made, this does at least suggest they have had confidence in the company's future. We always take careful note of the price insiders pay when purchasing shares. Generally speaking, it catches our eye when insiders have purchased shares at above current prices, as it suggests they believed the shares were worth buying, even at a higher price.
Happily, we note that in the last year insiders paid US$8.5m for 41.23k shares. But insiders sold 16408 shares worth US$3.1m. In total, Palo Alto Networks insiders bought more than they sold over the last year. You can see the insider transactions (by individuals) over the last year depicted in the chart below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
Palo Alto Networks is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Insiders at Palo Alto Networks Have Bought Stock Recently
There has been significantly more insider buying, than selling, at Palo Alto Networks, over the last three months. Lead Independent Director John Donovan spent US$3.0m on stock. But we did see insider selling worth US$2.8m. The buying outweighs the selling, which suggests that insiders may believe the company will do well in the future.
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 Palo Alto Networks insiders own 2.6% of the company, worth about US$430m. 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 Palo Alto Networks Insiders?
It is good to see the recent insider purchase. We also take confidence from the longer term picture of insider transactions. But on the other hand, the company made a loss last year, which makes us a little cautious. Along with the high insider ownership, this analysis suggests that insiders are quite bullish about Palo Alto Networks. Nice! So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. While conducting our analysis, we found that Palo Alto Networks has 3 warning signs and it would be unwise to ignore them.
If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, that have HIGH return on equity and low debt.
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, but not derivative transactions.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
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