02-05-2025
Insiders At Nasdaq Sold US$8.4m In Stock, Alluding To Potential Weakness
The fact that multiple Nasdaq, Inc. (NASDAQ:NDAQ) insiders offloaded a considerable amount of shares over the past year could have raised some eyebrows amongst investors. When analyzing insider transactions, it is usually more valuable to know whether insiders are buying versus knowing if they are selling, as the latter sends an ambiguous message. However, shareholders should take a deeper look if several insiders are selling stock over a specific time period.
While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we would consider it foolish to ignore insider transactions altogether.
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The Executive VP, Bradley Peterson, made the biggest insider sale in the last 12 months. That single transaction was for US$1.0m worth of shares at a price of US$75.38 each. That means that an insider was selling shares at below the current price (US$76.14). We generally consider it a negative if insiders have been selling, especially if they did so below the current price, because it implies that they considered a lower price to be reasonable. However, while insider selling is sometimes discouraging, it's only a weak signal. This single sale was just 8.7% of Bradley Peterson's stake.
Over the last year we saw more insider selling of Nasdaq shares, than buying. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
See our latest analysis for Nasdaq
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The last quarter saw substantial insider selling of Nasdaq shares. In total, President Tal Cohen dumped US$750k 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.
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. We usually like to see fairly high levels of insider ownership. It's great to see that Nasdaq insiders own 0.6% of the company, worth about US$268m. I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.
An insider hasn't bought Nasdaq stock in the last three months, but there was some selling. Despite some insider buying, the longer term picture doesn't make us feel much more positive. On the plus side, Nasdaq makes money, and is growing profits. It is good to see high insider ownership, but the insider selling leaves us cautious. While it's good to be aware of 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 1 warning sign with Nasdaq and understanding this should be part of your investment process.
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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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