Insiders who placed huge bets on Smartsheet Inc. (NYSE:SMAR) earlier this year would be disappointed with the 12% drop

The recent 12% drop in Smartsheet Inc.'s (NYSE:SMAR) stock could come as a blow to insiders who purchased US$11m worth of stock at an average buy price of US$63.96 over the past 12 months. This is not good as insiders invest based on expectations that their money will appreciate over time. However, as a result of recent losses, their original investment is now worth only US$7.3m.

While insider transactions are not the most important thing when it comes to long-term investing, logic dictates you should pay some attention to whether insiders are buying or selling shares.

View our latest analysis for Smartsheet

Smartsheet Insider Transactions Over The Last Year

Over the last year, we can see that the biggest insider purchase was by Independent Director James White for US$9.5m worth of shares, at about US$63.07 per share. So it's clear an insider wanted to buy, even at a higher price than the current share price (being US$43.20). Their view may have changed since then, but at least it shows they felt optimistic at the time. We always take careful note of the price insiders pay when purchasing shares. It is generally more encouraging if they paid above the current price, as it suggests they saw value, even at higher levels.

Happily, we note that in the last year insiders paid US$11m for 167.83k shares. But they sold 96.80k shares for US$6.9m. Overall, Smartsheet insiders were net buyers during the last year. The chart below shows insider transactions (by companies and individuals) over the last year. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

Smartsheet is not the only stock that insiders are buying. For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

Smartsheet Insiders Bought Stock Recently

Over the last three months, we've seen significantly more insider buying, than insider selling, at Smartsheet. Insiders spent US$9.6m on shares. But we did see insider selling worth US$1.8m. We think insiders may be optimistic about the future, since insiders have been net buyers of shares.

Does Smartsheet Boast High Insider Ownership?

Many investors like to check how much of a company is owned by 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 Smartsheet insiders own 3.5% of the company, worth about US$189m. Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.

What Might The Insider Transactions At Smartsheet Tell Us?

It's certainly positive to see the recent insider purchases. And an analysis of the transactions over the last year also gives us confidence. But on the other hand, the company made a loss during the last year, which makes us a little cautious. When combined with notable insider ownership, these factors suggest Smartsheet insiders are well aligned, and quite possibly think the share price is too low. One for the watchlist, at least! In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Smartsheet. To that end, you should learn about the 4 warning signs we've spotted with Smartsheet (including 1 which makes us a bit uncomfortable).

Of course Smartsheet 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, but not derivative transactions.

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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.