Insiders At System1 Sold US$8.3m Of Stock Potentially Indicating Weakness

Last week, System1, Inc.'s (NYSE:SST) stock jumped 81%, but insiders who sold US$8.3m worth of stock in over the past year are likely to be in a better position. Selling at an average price of US$1.50, which is higher than the current price, may have been the wisest decision for these insiders as their investment would have been worth less now than when they sold.

Although we don't think shareholders should simply follow insider transactions, we would consider it foolish to ignore insider transactions altogether.

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System1 Insider Transactions Over The Last Year

Over the last year, we can see that the biggest insider sale was by the CEO & Chairman, Michael Blend, for US$7.2m worth of shares, at about US$1.50 per share. While we don't usually like to see insider selling, it's more concerning if the sales take place at a lower price. The silver lining is that this sell-down took place above the latest price (US$0.58). So it may not tell us anything about how insiders feel about the current share price. Michael Blend was the only individual insider to sell shares in the last twelve months.

Michael Blend divested 5.50m shares over the last 12 months at an average price of US$1.50. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

View our latest analysis for System1

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

For a common shareholder, it is worth checking how many shares are held by company insiders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Insiders own 25% of System1 shares, worth about US$9.4m. We've certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.

So What Does This Data Suggest About System1 Insiders?

It doesn't really mean much that no insider has traded System1 shares in the last quarter. We don't take much encouragement from the transactions by System1 insiders. But it's good to see that insiders own shares in the company. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. For example, System1 has 3 warning signs (and 2 which are significant) we think you should know about.

Of course System1 may not be the best stock to buy. So you may wish to see this free collection of high quality 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 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.