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How Many Insiders Sold Cadence Design Systems, Inc. (NASDAQ:CDNS) Shares?

It is not uncommon to see companies perform well in the years after insiders buy shares. On the other hand, we’d be remiss not to mention that insider sales have been known to precede tough periods for a business. So we’ll take a look at whether insiders have been buying or selling shares in Cadence Design Systems, Inc. (NASDAQ:CDNS).

What Is Insider Selling?

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.

We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. But logic dictates you should pay some attention to whether insiders are buying or selling shares. For example, a Harvard University study found that ‘insider purchases earn abnormal returns of more than 6% per year.’

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See our latest analysis for Cadence Design Systems

The Last 12 Months Of Insider Transactions At Cadence Design Systems

Independent Director James Plummer made the biggest insider sale in the last 12 months. That single transaction was for US$349k worth of shares at a price of US$46.49 each. So we know that an insider sold shares at around the present share price of US$43.67. They could have a variety of motivations for selling, but it’s still not particularly encouraging to see. Arguably, insider selling at around current prices should give us reason to reflect on whether the stock is fully valued at the moment. The only individual insider seller over the last year was James Plummer.

The chart below shows insider transactions (by individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!

NasdaqGS:CDNS Insider Trading January 9th 19
NasdaqGS:CDNS Insider Trading January 9th 19

If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).

Insider Ownership

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. Cadence Design Systems insiders own about US$155m worth of shares (which is 1.3% of the company). 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 Do The Cadence Design Systems Insider Transactions Indicate?

It doesn’t really mean much that no insider has traded Cadence Design Systems shares in the last quarter. While we feel good about high insider ownership of Cadence Design Systems, we can’t say the same about the selling of shares. Of course, the future is what matters most. So if you are interested in Cadence Design Systems, you should check out this free report on analyst forecasts for the company.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.