We wouldn't blame Varonis Systems, Inc. (NASDAQ:VRNS) shareholders if they were a little worried about the fact that Guy Melamed, the CFO & COO recently netted about US$9.4m selling shares at an average price of US$49.88. That diminished their holding by a very significant 67%, which arguably implies a strong desire to reallocate capital.

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Varonis Systems Insider Transactions Over The Last Year

In fact, the recent sale by Guy Melamed was the biggest sale of Varonis Systems shares made by an insider individual in the last twelve months, according to our records. So it's clear an insider wanted to take some cash off the table, even below the current price of US$51.98. 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. Please do note, however, that sellers may have a variety of reasons for selling, so we don't know for sure what they think of the stock price. We note that the biggest single sale was 67% of Guy Melamed's holding.

In the last twelve months insiders purchased 10.78k shares for US$257k. On the other hand they divested 420.59k shares, for US$18m. Over the last year we saw more insider selling of Varonis Systems shares, than buying. The chart below shows insider transactions (by companies and individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

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Insider Ownership

Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. We usually like to see fairly high levels of insider ownership. Varonis Systems insiders own about US$106m worth of shares (which is 1.9% of the company). Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.

So What Do The Varonis Systems Insider Transactions Indicate?

Insiders sold stock recently, but they haven't been buying. Despite some insider buying, the longer term picture doesn't make us feel much more positive. It is good to see high insider ownership, but the insider selling leaves us cautious. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. In terms of investment risks, we've identified 2 warning signs with Varonis Systems and understanding them should be part of your investment process.

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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.