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HAVE INSIDERS BEEN SELLING SOLARWINDS CORPORATION (NYSE:SWI) SHARES?

Simply Wall St
November 18, 2020  •  Updated May 01, 2023

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We've lost count of how many times insiders have accumulated shares in a company
that goes on to improve markedly. Unfortunately, there are also plenty of
examples of share prices declining precipitously after insiders have sold
shares. So before you buy or sell SolarWinds Corporation (NYSE:SWI), you may
well want to know whether insiders have been buying or selling.


WHAT IS INSIDER SELLING?

Most investors know that it is quite permissible for company leaders, such as
directors of the board, to buy and sell stock in the company. However, rules
govern insider transactions, and certain disclosures are required.

We would never suggest that investors should base their decisions solely on what
the directors of a company have been doing. But equally, we would consider it
foolish to ignore insider transactions altogether. For example, a Columbia
University study found that 'insiders are more likely to engage in open market
purchases of their own company’s stock when the firm is about to reveal new
agreements with customers and suppliers'.

See our latest analysis for SolarWinds


SOLARWINDS INSIDER TRANSACTIONS OVER THE LAST YEAR

The President, Kevin Thompson, made the biggest insider sale in the last 12
months. That single transaction was for US$7.0m worth of shares at a price of
US$19.52 each. That means that an insider was selling shares at slightly below
the current price (US$21.43). 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. However, while insider selling
is sometimes discouraging, it's only a weak signal. This single sale was just
13% of Kevin Thompson's stake.

Insiders in SolarWinds 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!

NYSE:SWI Insider Trading Volume November 19th 2020

If you like to buy stocks that insiders are buying, rather than selling, then
you might just love this free list of companies. (Hint: insiders have been
buying them).


SOLARWINDS INSIDERS ARE SELLING THE STOCK

The last quarter saw substantial insider selling of SolarWinds shares. In total,
insiders dumped US$389k 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.


INSIDER OWNERSHIP

For a common shareholder, it is worth checking how many shares are held by
company insiders. We usually like to see fairly high levels of insider
ownership. SolarWinds insiders own about US$92m worth of shares. That equates to
1.4% of the company. While this is a strong but not outstanding level of insider
ownership, it's enough to indicate some alignment between management and smaller
shareholders.


WHAT MIGHT THE INSIDER TRANSACTIONS AT SOLARWINDS TELL US?

Insiders sold stock recently, but they haven't been buying. Looking to the last
twelve months, our data doesn't show any insider buying. Insiders own shares,
but we're still pretty cautious, given the history of sales. We'd practice some
caution before buying! While we like knowing 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. For example, SolarWinds has 4
warning signs (and 1 which shouldn't be ignored) we think you should know about.

Of course, you might find a fantastic investment by looking elsewhere. So take a
peek at this free list of interesting companies.

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, but not derivative
transactions.

If you decide to trade SolarWinds, use the lowest-cost* platform that is rated
#1 Overall by Barron’s, Interactive Brokers. Trade stocks, options, futures,
forex, bonds and funds on 135 markets, all from a single integrated account.
Promoted



VALUATION IS COMPLEX, BUT WE'RE HELPING MAKE IT SIMPLE.

Find out whether SolarWinds is potentially over or undervalued by checking out
our comprehensive analysis, which includes fair value estimates, risks and
warnings, dividends, insider transactions and financial health.

View the Free Analysis

This article by Simply Wall St is general in nature. 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.
*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online
Review 2020

Have feedback on this article? Concerned about the content? Get in touch with us
directly. Alternatively, email editorial-team@simplywallst.com.


ABOUT NYSE:SWI

SOLARWINDS

SolarWinds Corporation provides information technology (IT) management software
products in the United States and internationally.

See The Free Research Report

Undervalued with mediocre balance sheet.

See The Free Research Report


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