In the last year, many Adobe Inc. (NASDAQ:ADBE) insiders sold a substantial stake in the company which may have sparked shareholders’ attention. Knowing whether insiders are buying is usually more helpful when insider transactions, as evaluating insider selling can have various explanations. However, shareholders should take a deeper look if several insiders are selling stock over a specific time period.
While insider transactions are not the most important thing when it comes to long-term investing, we would consider it foolish to completely ignore insider transactions.
Check out our latest analysis for Adobe
Adobe Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider sale was by the Co-Founder & Independent Director, John Warnock, for US$5.4m worth of shares, at about US$320 per share. That means that even when the share price was below the current price of US$495, an insider wanted to cash in some shares. 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. However, while insider selling is sometimes discouraging, it’s only a weak signal. This single sale was just 4.0% of John Warnock’s stake.
Happily, we note that in the last year insiders paid US$1.3m for 4.45k shares. On the other hand they divested 51.80k shares, for US$17m. Over the last year we saw more insider selling of Adobe 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, individually and the date!
For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.
Insiders At Adobe Have Sold Stock Recently
The last three months saw significant insider selling at Adobe. Specifically, Co-Founder & Independent Director John Warnock ditched US$1.1m worth of shares in that time, and we didn’t record any purchases whatsoever. This may suggest that some insiders think that the shares are not cheap.
Does Adobe Boast High Insider Ownership?
Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. I reckon it’s a good sign if insiders own a significant number of shares in the company. Adobe insiders own 0.3% of the company, currently worth about US$584m based on the recent share price. Most shareholders would be happy to see this kind of insider ownership, since it suggests that management incentives are well aligned with other shareholders.
So What Do The Adobe Insider Transactions Indicate?
An insider sold Adobe shares recently, but they didn’t buy any. Despite some insider buying, the longer term picture doesn’t make us feel much more positive. But it is good to see that Adobe is growing earnings. It is good to see high insider ownership, but insider selling makes us wary. So these insider transactions can help us build a thesis about the stock, but it’s also worthwhile knowing the risks facing this company. Every company has risks, and we’ve spotted 1 warning sign for Adobe you should know about.
Of course Adobe may not be the best stock to buy. So you may wish 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 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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