We often see insiders buying up shares in companies that perform well over the long term. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So we’ll take a look at whether insiders have been buying or selling shares in salesforce.com, inc. (NYSE:CRM).
Do Insider Transactions Matter?
It’s quite normal to see company insiders, such as board members, trading in company stock, from time to time. However, such insiders must disclose their trading activities, and not trade on inside information.
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. As Peter Lynch said, ‘insiders might sell their shares for any number of reasons, but they buy them for only one: they think the price will rise’.
View our latest analysis for salesforce.com
The Last 12 Months Of Insider Transactions At salesforce.com
The Lead Independent Director, Sanford Robertson, made the biggest insider sale in the last 12 months. That single transaction was for US$4.1m worth of shares at a price of US$274 each. We generally don’t like to see insider selling, but the lower the sale price, the more it concerns us. The silver lining is that this sell-down took place above the latest price (US$226). So it may not shed much light on insider confidence at current levels.
salesforce.com insiders didn’t buy any shares over the last year. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. By clicking on the graph below, you can see the precise details of each insider transaction!
If you like to buy stocks that insiders are buying, rather than selling, then you might just love this free list of companies. (Hint: insiders have been buying them).
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. salesforce.com insiders own about US$7.4b worth of shares (which is 3.6% of the company). Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.
So What Do The salesforce.com Insider Transactions Indicate?
It doesn’t really mean much that no insider has traded salesforce.com shares in the last quarter. While we feel good about high insider ownership of salesforce.com, we can’t say the same about the selling of shares. In addition to knowing about insider transactions going on, it’s beneficial to identify the risks facing salesforce.com. At Simply Wall St, we’ve found that salesforce.com has 3 warning signs (1 is concerning!) that deserve your attention before going any further with your analysis.
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.
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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. 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.
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