Despite the fact that Snowflake Inc. (NYSE:SNOW) stock rose 11% last week, insiders who sold US$168m worth of stock in the previous 12 months are likely to be better off. Selling at an average price of US$223, which is higher than the current price, may have been the best move for these insiders because their investment would have been worth less now than when they sold.
Although we don't think shareholders should simply follow insider transactions, logic dictates you should pay some attention to whether insiders are buying or selling shares.
Snowflake Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider sale was by the Lead Independent Director, Michael Speiser, for US$167m worth of shares, at about US$223 per share. We generally don't like to see insider selling, but the lower the sale price, the more it concerns us. The good news is that this large sale was at well above current price of US$189. So it is hard to draw any strong conclusion from it.
Over the last year we saw more insider selling of Snowflake shares, than buying. The chart below shows insider transactions (by companies and individuals) over the last year. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
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).
Insiders At Snowflake Have Sold Stock Recently
Over the last three months, we've seen significant insider selling at Snowflake. Specifically, Independent Director Teresa Briggs ditched US$633k worth of shares in that time, and we didn't record any purchases whatsoever. In light of this it's hard to argue that all the insiders think that the shares are a bargain.
Insider Ownership Of Snowflake
I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with insiders. I reckon it's a good sign if insiders own a significant number of shares in the company. It's great to see that Snowflake insiders own 7.3% of the company, worth about US$4.4b. 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 Snowflake Insiders?
An insider sold Snowflake shares recently, but they didn't buy any. Zooming out, the longer term picture doesn't give us much comfort. The company boasts high insider ownership, but we're a little hesitant, given the history of share sales. While we like knowing what's going on with the insider's ownership and transactions, we make sure to also consider what risks are facing a stock before making any investment decision. In terms of investment risks, we've identified 4 warning signs with Snowflake and understanding them should be part of your investment process.
But note: Snowflake may not be the best stock to buy. So take a peek at this free list of interesting companies with high ROE 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. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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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