Some MongoDB, Inc. (NASDAQ:MDB) shareholders may be a little concerned to see that the Co-Founder & Director, Dwight Merriman, recently sold a substantial US$7.4m worth of stock at a price of US$464 per share. However, that sale only accounted for 1.1% of their holding, so arguably it doesn't say much about their conviction.

The Last 12 Months Of Insider Transactions At MongoDB

In the last twelve months, the biggest single sale by an insider was when the Independent Director, Roelof Botha, sold US$18m worth of shares at a price of US$400 per share. That means that even when the share price was below the current price of US$441, 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. However, while insider selling is sometimes discouraging, it's only a weak signal. We note that the biggest single sale was only 23% of Roelof Botha's holding.

MongoDB insiders didn't buy any shares over the last year. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

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

Insider Ownership Of MongoDB

I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with 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. MongoDB insiders own about US$882m worth of shares (which is 2.5% of the company). I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.

So What Do The MongoDB Insider Transactions Indicate?

Insiders sold stock recently, but they haven't been buying. Looking to the last twelve months, our data doesn't show any insider buying. It is good to see high insider ownership, but the insider selling leaves us cautious. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing MongoDB.

But note: MongoDB 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.