Hey y'all! Today's research will be based on insider trading activity from the opposite perspective - selling activity for the last 1-2 months! For those of you who missed the previous post on insider buying activity - go check it here!
It seems to us that this is an important market indicator if the insiders of a particular company sell or buy most of their stock, this indirectly determines the company's performance and the mood of employees. True, corporate insiders – the senior employees and executives who run the company – are privy to information that we, outsiders, are not. When these insiders sell the stock, it's only natural for outsiders to wonder if something is afoot. However, as opposed to insider buying, insider selling doesn't tell us all that much. The reason? Insiders sell the stock for a number of reasons, the vast majority of which are unsophisticated.
An insider buys the stock, however, for one reason only - he or she is bullish on the company, its shares, and its prospects.
We've been collecting data from Nasdaq and other financial sources for 1-2 last months, and then aggregated it for all public US companies.
1. Baker Hughes Company ($BKR) - the company provides a portfolio of technologies and services worldwide. It operates through four segments: Oilfield Services (OFS), Oilfield Equipment (OFE), Turbomachinery & Process Solutions (TPS), and Digital Solutions (DS).
2. Zoominfo Technologies ($ZI) - the company provides a go-to-market intelligence platform for sales and marketing teams.
Just to support our opinion that insider activity is not always a strong signal to sell, take a look at the peak seeling activity for $ZI in August 2021. However, their shares have been growing after it:
3. Vertiv Holdings Co. ($VRT) - together with its subsidiaries, the company designs, manufactures, and services critical digital infrastructure technologies and life cycle services for data centers, communication networks, and commercial and industrial environments in the Americas, the Asia Pacific, Europe, the Middle East, and Africa.
4. TaskUs, Inc. ($TASK) - is a provider of outsourced digital services and next-generation customer experience to innovative and disruptive technology companies.
5. Sunnova Energy International Inc. ($NOVA) - Sunnova provides residential solar and energy storage services in the United States. The company offers operations and maintenance, monitoring, repairs and replacements, equipment upgrades, on-site power optimization, and diagnostics services.
For $NOVA we can see a similar situation, there were few peaks of selling activity, but the shares have been constantly growing during that period. Only the last peak in December 2020 has slightly affected the stock price (and we can't know for sure that it was exactly the reason for decreasing the price during the next 3-4 months):
So, what does it mean if you see someone from the insiders are selling? But in the meantime, the others are holding their shares? That is not always a red flag. But if you see a pattern of regular selling without an objective reason, it may be a good time to take note.
To sum it up, we would like to underline that are many factors to think about before making an investment. Looking at insider buying and selling activity can be a powerful investment sign that may help you predict future swings in stock prices. But it shouldn't be your only source of information - you can just use it in conjunction with your investment strategy.
As always, you can check today's research here: https://contora.ai/top_companies?industry=all&growth=insider trading sell&over=last month
You can also check other alternative data points for the companies mentioned in this post just by clicking on their tickers :)