It is not uncommon to see companies perform well in the years after insiders buy shares. Unfortunately, there are also many examples of stock prices dropping sharply after insiders sold the shares. Therefore, shareholders may want to know whether insiders have been buying or selling shares in Guidewire Software, Inc. (NYSE: GWRE)
What is a privileged purchase?
It is quite normal to see people inside the company, as board members, trading company shares from time to time. However, the rules govern internal transactions and certain disclosures are necessary.
We would never suggest that investors should base their decisions solely on what a company’s directors have been doing. But logic dictates that you pay attention to whether insiders are buying or selling stocks. For example, a Harvard University studying found that ‘privileged purchases generate abnormal returns of more than 6% per year’.
Guidewire Software Insider transactions over the past year
Independent director Andrew Brown made the biggest insider purchase in the past 12 months. That single transaction was $ 747,000 in shares at a price of $ 125 each. This means that an insider was happy to buy shares above the current price of $ 103. It is very possible that they will regret the purchase, but they are more likely to be optimistic about the company. We always take note of the price that insiders pay when buying shares. In general, we called our attention when an insider bought shares above current prices, as it suggests that they believed it was worthwhile to buy shares, even at a higher price. Andrew Brown was the only individual insider to buy during the past year.
In all, insiders sold more shares of Guidewire Software than they bought last year. You can see the internal transactions (by companies and individuals) over the past year, represented in the chart below. If you want to know exactly who sold, for how much and when, just click on the chart below!
If you like to buy stocks that insiders are buying, instead of selling, then you can love it free list of companies. (Hint: insiders have been buying).
Guidewire Software insiders recently sold shares
In the past three months, we’ve seen significant internal sales at Guidewire Software. Specifically, leading independent director Paul Lavin disposed of $ 131,000 in shares at that time and we did not record any purchases. In light of this, it is difficult to argue that all insiders think stocks are a bargain.
Another way to test the alignment between a company’s leaders and other shareholders is to check how many shares they own. We usually like to see very high levels of internal ownership. Insiders own 0.2% of the shares of Guidewire Software, worth about $ 13 million. This level of privileged property is good, but it hardly stands out. It certainly suggests a reasonable degree of alignment.
What can Guidewire Software’s internal transactions tell us?
An insider has not bought shares in Guidewire Software in the past three months, but there have been some sales. Moving the zoom away, the long-term image does not give us much comfort. Although insiders own shares, they do not own a stack and are selling. We are in no hurry to buy! In addition to knowing about ongoing internal transactions, it is useful to identify the risks faced by Guidewire Software. Be aware that Guidewire Software is showing 3 warning signs in our investment analysis, and 1 of them is a little unpleasant …
Of course Guidewire software may not be the best stock to buy. So you might want 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 provisions, but not derivative transactions.
When trading Guidewire Software or any other investment, use the platform considered by many to be the Professional’s Gateway to the World Market, Interactive brokers. You get the lowest cost * of trading in stocks, options, futures, forex, bonds and funds worldwide from a single integrated account.
This Simply Wall St article is of a general nature. It does not constitute a recommendation to buy or sell shares and does not take into account your objectives or your financial situation. Our goal is to bring you an analysis focused on the long term, conducted by fundamental data. Please note that our review may not take into account the latest ads from price-sensitive companies or qualitative materials. Simply Wall St has no position in any of the aforementioned shares.
*Interactive brokers classified as lowest cost broker by StockBrokers.com 2020 annual online review
Do you have any feedback on this article? Worried about the content? Get in touch with us directly. Alternatively, send an email to the editorial team (at) simplywallst.com.