We wouldn't blame Fair Isaac Corporation (NYSE:FICO) shareholders if they were a little worried about the fact that James Kirsner, the Independent Director recently netted about US$5.1m selling shares at an average price of US$1,697. That sale reduced their total holding by 19% which is hardly insignificant, but far from the worst we've seen.

Fair Isaac Insider Transactions Over The Last Year

In the last twelve months, the biggest single sale by an insider was when the Executive VP & Chief Human Resources Officer, Richard Deal, sold US$19m worth of shares at a price of US$1,390 per share. So it's clear an insider wanted to take some cash off the table, even below the current price of US$1,775. When an insider sells below the current price, it suggests that they considered that lower price to be fair. That makes us wonder what they think of the (higher) recent 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 22% of Richard Deal's stake.

Insiders in Fair Isaac didn't buy any shares in the last year. 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).

Insider Ownership Of Fair Isaac

For a common shareholder, it is worth checking how many shares are held by company insiders. I reckon it's a good sign if insiders own a significant number of shares in the company. Fair Isaac insiders own about US$1.1b worth of shares (which is 2.6% 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 Do The Fair Isaac Insider Transactions Indicate?

Insiders haven't bought Fair Isaac stock in the last three months, but there was some selling. And even if we look at the last year, we didn't see any purchases. But since Fair Isaac is profitable and growing, we're not too worried by this. It is good to see high insider ownership, but the insider selling leaves us cautious. So while it's helpful to know what insiders are doing in terms of buying or selling, it's also helpful to know the risks that a particular company is facing. In terms of investment risks, we've identified 2 warning signs with Fair Isaac and understanding these should be part of your investment process.

But note: Fair Isaac 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.