Salesforce Insiders Sell US$9.0m Of Stock, Possibly Signalling Caution

In the last year, many Salesforce, Inc. (NYSE:CRM) insiders sold a substantial stake in the company which may have sparked shareholders’ attention. Knowing whether insiders are buying is usually more helpful when evaluating insider transactions, as insider selling can have various explanations. However, shareholders should take a deeper look if several insiders are selling stock over a specific time period.

Although we don’t think shareholders should simply follow insider transactions, we do think it is perfectly logical to keep tabs on what insiders are doing.

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In the last twelve months, the biggest single sale by an insider was when the President, Srinivas Tallapragada, sold US$2.5m worth of shares at a price of US$253 per share. So what is clear is that an insider saw fit to sell at around the current price of US$240. While insider selling is a negative, to us, it is more negative if the shares are sold at a lower price. In this case, the big sale took place at around the current price, so it’s not too bad (but it’s still not a positive).

Over the last year, we can see that insiders have bought 8.98k shares worth US$2.4m. On the other hand they divested 34.46k shares, for US$9.0m. Over the last year we saw more insider selling of Salesforce 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!

View our latest analysis for Salesforce

If you like to buy stocks that insiders are buying, rather than selling, then you might just love this free list of companies. (Hint: Most of them are flying under the radar).

It’s good to see that Salesforce insiders have made notable investments in the company’s shares. We can see that insider David Kirk paid US$866k for shares in the company. No-one sold. This makes one think the business has some good points.

For a common shareholder, it is worth checking how many shares are held by company insiders. We usually like to see fairly high levels of insider ownership. Salesforce insiders own 2.6% of the company, currently worth about US$5.8b based on the recent share price. This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.

It’s certainly positive to see the recent insider purchase. However, the longer term transactions are not so encouraging. Overall, we’d prefer see a more sustained buying from directors, but with a significant insider holding and more recent purchases, Salesforce insiders are reasonably well aligned, and optimistic for the future. If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its future.

But note: Salesforce 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 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.