The fact that multiple Paychex, Inc. (NASDAQ:PAYX) 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.

The Last 12 Months Of Insider Transactions At Paychex

Over the last year, we can see that the biggest insider sale was by the Chairman, Martin Mucci, for US$5.5m worth of shares, at about US$117 per share. So it's clear an insider wanted to take some cash off the table, even below the current price of US$141. 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. We note that the biggest single sale was only 9.3% of Martin Mucci's holding.

In total, Paychex insiders sold more than they bought over the last year. The chart below shows insider transactions (by companies and individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

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Paychex Insiders Bought Stock Recently

There was some insider buying at Paychex over the last quarter. insider David Flaschen bought US$15k worth of shares in that time. It's great to see that insiders are only buying, not selling. But in this case the amount purchased means the recent transaction may not be very meaningful on its own.

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. We usually like to see fairly high levels of insider ownership. Paychex insiders own about US$5.4b worth of shares (which is 11% of the company). 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 Does This Data Suggest About Paychex Insiders?

We note a that there has been a bit of insider buying recently (but no selling). The net investment is not enough to encourage us much. While we gain confidence from high insider ownership of Paychex, we can't say the same about their transactions in the last year, in the absence of further purchases. Therefore, you should definitely take a look at this FREE report showing analyst forecasts for Paychex.

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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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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.