Although JFrog Ltd. (NASDAQ: FROG) shareholders had a great week with shares up 13%, insiders who sold shares in the past year didn’t fare as well. They could have sold their shares at much higher prices and obtained a better return on their investment if they had waited.

While we don’t believe shareholders should simply follow insider trading, we would consider it foolish to ignore insider trading altogether.

Check opportunities and risks within the US software industry.

The last 12 months of insider trading at JFrog

In the past twelve months, the largest single insider sale occurred when CFO Jacob Shulman sold US$122,000 worth of stock at US$19.55 per share. This means that even when the stock price was below the current price of US$25.58, an insider wanted to cash out some shares. Generally, we consider it discouraging when insiders sell below the current price, as it suggests they were happy with a lower valuation. Please note, however, that sellers may have various reasons for selling, so we don’t know for sure what they think of the stock price. It should be noted that this sale represented only 4.1% of Jacob Shulman’s stake.

JFrog insiders did not buy any shares last year. You can see a visual representation of insider trading (by companies and individuals) over the past 12 months, below. If you click on the chart, you can see all individual trades including stock price, individual and date!

If you like buying stocks that insiders are buying, rather than selling, then you might love this free list of companies. (Hint: insiders bought them).

JFrog insiders sell the stock

The last quarter saw significant insider selling of JFrog shares. In total, insiders sold US$52,000 worth of shares during this period, and we did not record any purchases. All in all, that makes us a little cautious, but that’s not all.

Does JFrog boast of high insider ownership?

Examining the total insider holdings in a company can help you know if they are well aligned with common shareholders. High insider participation often makes company management more concerned with the interests of shareholders. It’s great to see that JFrog insiders own 24% of the company, worth around $627 million. This type of significant insider ownership generally increases the chances that the company will be run in the best interests of all shareholders.

What could insider trading at JFrog tell us?

Insiders haven’t bought JFrog stock in the past three months, but there have been some sales. And even if we look at last year, we haven’t seen any purchases. It’s good to see strong insider ownership, but insider selling leaves us cautious. In addition to knowing the insider trading going on, it pays to identify the risks that JFrog faces. During our analysis, we found that JFrog has 3 warning signs and it would be unwise to ignore them.

Sure JFrog may not be the best stock to buy. So you might want to see this free set of high quality companies.

For the purposes of this article, insiders are persons who report their transactions to the relevant regulatory body. We currently record open market transactions and private dispositions, but not derivative transactions.

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This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.