Some Paycom Software, Inc. (NYSE:PAYC) shareholders may be a little concerned to see that the CFO & Treasurer, Craig Boelte, recently sold a substantial US$1.9m worth of stock at a price of US$156 per share. However, that sale only accounted for 4.0% of their holding, so arguably it doesn't say much about their conviction.
The Last 12 Months Of Insider Transactions At Paycom Software
Notably, that recent sale by Craig Boelte is the biggest insider sale of Paycom Software shares that we've seen in the last year. That means that even when the share price was below the current price of US$160, 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. 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. This single sale was just 4.0% of Craig Boelte's stake.
Happily, we note that in the last year insiders paid US$72k for 465.00 shares. On the other hand they divested 33.91k shares, for US$5.7m. Over the last year we saw more insider selling of Paycom Software 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!
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).
Does Paycom Software Boast High Insider Ownership?
I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with insiders. We usually like to see fairly high levels of insider ownership. It's great to see that Paycom Software insiders own 13% of the company, worth about US$1.1b. This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.
So What Do The Paycom Software Insider Transactions Indicate?
Unfortunately, there has been more insider selling of Paycom Software stock, than buying, in the last three months. Zooming out, the longer term picture doesn't give us much comfort. But since Paycom Software is profitable and growing, we're not too worried by this. While insiders do own a lot of shares in the company (which is good), our analysis of their transactions doesn't make us feel confident about the company. 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. To assist with this, we've discovered 1 warning sign that you should run your eye over to get a better picture of Paycom Software.
But note: Paycom Software 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.