While HubSpot, Inc. (NYSE:HUBS) shareholders have had a good week with the stock up 16%, they shouldn't let their guards down. The fact that insiders chose to dispose of US$8.9m worth of stock in the past 12 months even though prices were relatively low could be indicative of some anticipated weakness.

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.

HubSpot Insider Transactions Over The Last Year

Over the last year, we can see that the biggest insider sale was by the Co-Founder, Dharmesh Shah, for US$7.1m worth of shares, at about US$470 per share. That means that even when the share price was below the current price of US$657, 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 1.0% of Dharmesh Shah's stake.

Over the last year we saw more insider selling of HubSpot shares, than buying. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

I will like HubSpot better if I see some big insider buys.

Does HubSpot Boast High 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. It's great to see that HubSpot insiders own 3.7% of the company, worth about US$1.2b. I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.

What Might The Insider Transactions At HubSpot Tell Us?

It doesn't really mean much that no insider has traded HubSpot shares in the last quarter. It's heartening that insiders own plenty of stock, but we'd like to see more insider buying, since the last year of HubSpot insider transactions don't fill us with confidence. 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. While conducting our analysis, we found that HubSpot has 1 warning sign and it would be unwise to ignore it.

But note: HubSpot 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.

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.