Insider selling is picking up in these stocks and may signal a change in the wind for their share prices. The question is, what kind of turning point? Sometimes, insiders sell into a rally to capture gains even when the stock is heading higher. This is a look at the three stocks most sold by insiders this quarter and where their prices may be heading next.
Altair Engineering is the Most Sold Stock: Uptrend Intact
Altair Engineering (NASDAQ: ALTR) is the most sold by insiders by a wide margin, with twelve insiders making at least two transactions each over the last ninety days. Insiders include major shareholders, board members, and too many C-suite executives to list, including the CEO, CTO, and CAO. Their activity is alarming but mitigated by the facts this company lends into share-based compensation, and the stock is trading at record highs.
Altair's shares are up 400% from the IPO price, which presents an attractive profit point for early investors. Still, insiders and major shareholders own about 22% of the stock and institutions about 65%, making it a tightly-held stock. Institutional activity is opposite the insiders; they have bought for three consecutive quarters and five of the last six, providing a tailwind for the market. The largest shareholder is Matrix Capital Management, with nearly 22% of the stock. Matrix Capital Management is a private investment firm focused on a concentrated portfolio of high-conviction assets.
Altair Engineering is a micro-cap focused on software and cloud-based services for simulation and design. The analysts' rate is at Moderate Buy, and see it advancing about 5% at the consensus, and the consensus is led higher by recent revisions.
Carvana Insiders Sell Into the Rally
Carvana (NYSE: CVNA) insider selling raised a red flag in Q2 by spiking to a multiyear high. The spike is all the more troublesome because of the depth of sales, which includes ten insiders for thirty-two transactions. The bulk of sales by far is by major shareholder Ernest C. Garcia II, the CEO's father, but the CEO, CBO (and co-founder), and several directors are also in the mix. The mitigating factors include that this stock is up 1000% from its lows, the company uses share-based compensation, and many of Mr. Garcia’s holdings (both the father and the son) were bought in 2022 when the stock was trading near its lowest levels.
Among the drivers for the stock price rebound are a return to growth and profits. The company struggled with growth and profitability for the last two years but turned a corner late in 2023. The pivot has the analysts raising their targets for the stock. They rated it a Moderate Buy and lifted the consensus price target by nearly 200% in the last twelve months. Their activity put the stock on MarketBeat’s list of Most Upgraded Stocks, leading the market higher. The latest update comes from JPMorgan, which ranks it as a top pick, citing tight inventory and its business-to-consumer model that shifts fleet vehicles to the public market.
nCino Insiders Are Dumping Stock Like Mad
nCino (NASDAQ: NCNO) is a cloud-based SaaS platform connecting financial institutions with clients. The platform provides onboarding and basic services like account opening and loan origination and resonates with clients. The micro-cap business is growing at a double-digit pace and is profitable, which has grabbed the attention of analysts. Analysts rate this stock at Moderate Buy and have raised their price targets since the last earnings release. They see it trading at the floor with a potential for a 20% upside.
Ironically, nCino insider selling ramped to a multi-year high in Q2. Nine insiders are selling, including the CEO, CFO, directors, and major shareholders. However, the activity abruptly stopped in early May, a few weeks before the Q1 report was released. With this dynamic in play, the stock could begin to advance. A move to the analysts' consensus puts the stock near the recent high and on track to reverse.
