Shift4 Payments, Inc. (NYSE:FOUR) insiders who bought shares over the past year were rewarded handsomely last week. The stock rose 22%, resulting in a US$1.1b rise in the company's market capitalisation, translating to a gain of 14% on their initial investment. As a result, their original purchase of US$11.3m worth of stock is now worth US$12.9m.

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.

Shift4 Payments Insider Transactions Over The Last Year

In the last twelve months, the biggest single purchase by an insider was when Founder Jared Isaacman bought US$5.8m worth of shares at a price of US$67.09 per share. Even though the purchase was made at a significantly lower price than the recent price (US$76.03), we still think insider buying is a positive. While it does suggest insiders consider the stock undervalued at lower prices, this transaction doesn't tell us much about what they think of current prices.

Jared Isaacman bought 169.21k shares over the last 12 months at an average price of US$66.96. 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!

There are always plenty of stocks that insiders are buying. If investing in lesser known companies is your style, you could take a look at this free list of companies. (Hint: insiders have been buying them).

Shift4 Payments Insiders Bought Stock Recently

There has been significantly more insider buying, than selling, at Shift4 Payments, over the last three months. In total, Founder Jared Isaacman bought US$5.6m worth of shares in that time. But we did see insider selling worth US$795k. Insiders have spent more buying shares than they have selling, so on balance we think they are are probably optimistic.

Insider Ownership

Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. I reckon it's a good sign if insiders own a significant number of shares in the company. Shift4 Payments insiders own 3.2% of the company, currently worth about US$204m based on the recent share price. 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 Shift4 Payments Insider Transactions Indicate?

It is good to see the recent insider purchase. And an analysis of the transactions over the last year also gives us confidence. Along with the high insider ownership, this analysis suggests that insiders are quite bullish about Shift4 Payments. One for the watchlist, at least! So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. To assist with this, we've discovered 3 warning signs that you should run your eye over to get a better picture of Shift4 Payments.

But note: Shift4 Payments 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.