We wouldn't blame Cloudflare, Inc. (NYSE:NET) shareholders if they were a little worried about the fact that Carl Ledbetter, the Independent Director recently netted about US$2.1m selling shares at an average price of US$68.65. However, it's crucial to note that they remain very much invested in the stock and that sale only reduced their holding by 2.6%.
The Last 12 Months Of Insider Transactions At Cloudflare
In fact, the recent sale by Carl Ledbetter was the biggest sale of Cloudflare shares made by an insider individual in the last twelve months, according to our records. So it's clear an insider wanted to take some cash off the table, even below the current price of US$70.73. As a general rule we consider it to be discouraging when insiders are selling below the current price, because it suggests they were happy with a lower valuation. While insider selling is not a positive sign, we can't be sure if it does mean insiders think the shares are fully valued, so it's only a weak sign. It is worth noting that this sale was only 2.6% of Carl Ledbetter's holding.
Cloudflare insiders didn't buy any shares over the last year. The chart below shows insider transactions (by companies and individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!
For those who like to find hidden gems this free list of small cap companies with recent insider purchasing, could be just the ticket.
Insider Ownership Of Cloudflare
For a common shareholder, it is worth checking how many shares are held by company insiders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. It's great to see that Cloudflare insiders own 12% of the company, worth about US$2.8b. 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 Cloudflare Insider Transactions Indicate?
Insiders sold Cloudflare shares recently, but they didn't buy any. And there weren't any purchases to give us comfort, over the last year. It is good to see high insider ownership, but the insider selling leaves us cautious. 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. Case in point: We've spotted 3 warning signs for Cloudflare you should be aware of.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting 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 dispositions of direct interests only, but not derivative transactions or indirect interests.
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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.