Re: “I have to admit that I broke down and added a little at $72.40 even though it was already my largest position. A 10.6% fall because some analyst moved it down a notch just made no sense to me. Of, course, adding to a very large position probably didn’t make sense either.
Best, Saul”
I held off because it’s one of my largest positions too, but now that it’s below $72 I decided to take another nibble '-)
Thanks to all for your insight. I was wondering what was going on as I did not see anything in the news. I have a fair bit invested in security software stocks, and only a tiny position in ZS, but it seems the risk/reward ratio on this downgrade warrants adding.
Fortunately we have these forums to rationalize and socialize on such things. I’m grateful for this community.
Captain -
Just because they’re pre-arranged plans doesn’t mean they’re not selling shares. Sure, they may just want their yachts now - and it’s not that meaningful - but it’s still selling. And when Yahoo!Finance has a list of some big sales going down on August 1st, right before a noted research org downgrades the stock it is objectively not helpful to the cause of inspiring confidence in a richly valued stock. But anyway, thanks for the lecture. I agree, it’s probably not a big deal.
BD
BD, if you look back at Amazon, back from when they were selling at $10 per share and every month right up to their current $1800 per share, and you will see probably 20 insider sales per month, every month. And I’m not exaggerating. That’s just life at these companies that give a lot of their pay in stock.
Best,
Saul
Just because they’re pre-arranged plans doesn’t mean they’re not selling shares.
Obvious but expected.
And when Yahoo!Finance has a list of some big sales going down on August 1st, right before a noted research org downgrades the stock it is objectively not helpful to the cause of inspiring confidence in a richly valued stock.
Let’s check the August 1st sales:
Apte Manoj: http://secfilings.nasdaq.com/filingFrameset.asp?FilingID=135…
Explanation of Responses:
(1) The sale reported in this Form 4 was effected pursuant to a Rule 10b5-1 trading plan adopted on September 28, 2018.
(2) The price reported in Column 4 is a weighted average price. These shares were sold in multiple transactions at prices ranging from $83.745 to $84.74, inclusive. The reporting person undertakes to provide to the Issuer, any security holder of the Issuer, or the staff of the Securities and Exchange Commission, upon request, full information regarding the number of shares sold at each separate price within the ranges set forth in footnotes (2), (3), (4), (5) and (7) to this Form 4.
(3) The price reported in Column 4 is a weighted average price. These shares were sold in multiple transactions at prices ranging from $84.75 to $85.74, inclusive.
(4) The price reported in Column 4 is a weighted average price. These shares were sold in multiple transactions at prices ranging from $85.75 to $85.88, inclusive.
(5) The price reported in Column 4 is a weighted average price. These shares were sold in multiple transactions at prices ranging from $83.97 to $84.84, inclusive.
(6) The shares are held directly by the Akshay Kosh Family Trust dated December 18, 2006 for which the reporting person and his spouse serve as trustees.
(7) The price reported in Column 4 is a weighted average price. These shares were sold in multiple transactions at prices ranging from $85.14 to $85.80, inclusive.
(8) The shares are held directly by the reporting person’s mother-in-law.
(9) The shares are held directly by the reporting person’s father-in-law.
(10) The shares are held directly by the Manoj Apte 2017 GRAT for which the reporting person serves as trustee.
(11) The shares are held directly by the Lalita Godbole 2017 GRAT for which the reporting person’s spouse serves as trustee.
(12) The shares subject to the option are fully vested and immediately exercisable.
I think that item 12 is the important one: “The shares subject to the option are fully vested and immediately exercisable.” I don’t know when when they wested but it’s compensation in lieu of salaries.
Here you can find the other two August 1st sales in the link below, they are also sales of vested option shares:
https://www.nasdaq.com/symbol/zs/sec-filings
Make of the sales what you will, I think they are irrelevant to Zscaler’s future. I bought some at $73.8571.
You either like stock options or you don’t. I do, Warren Buffett doesn’t. If you pay with options expect them to be converted to cash for whatever they want to spend it on. My take on stock options:
June 11, 2002
Options Math
https://softwaretimes.com/files/options%20math.html
When I started a business in Silicon Valley I didn’t have the cash to hire two programmers so I gave then stock options instead. Stock options are a great way to fund a business.
Denny Schlesinger
“Between 2015 and 2017, total U.S. cyber premiums written by insurers that reported to the NAIC doubled to an estimated $3.1 billion”
https://www.propublica.org/article/the-extortion-economy-how…
I would read this as positive for Zscaler. The article mentions that an IT manager got fired over poor security, so there’s some motivation for spending. And the 40% growth rate and $3 billion in cyber premiums indicate a large, growing market.
Zscaler’s price is down a bit recently, with the next earnings date in about a week on September 10th. The last two earnings announcements had positive earnings surprises:
Fiscal Q end Announced Estimate Actual Difference
30-Jul-19 10-Sep-19 $0.015 ???
30-Apr-19 30-May-19 $0.011 $0.050 $0.039
31-Jan-19 28-Feb-19 -$0.008 $0.090 $0.098
Sales growth last year was an outstanding 60%:
Sales last 12m previous 12m growth
Q3 79.1 49.2 61%
Q2 74.3 45 65%
Q1 63.3 39.9 59%
Q4 56.2 36.5 54%
total 272.9 170.6 60%
Insider shares can be a positive indicator, but often it is just noise.
Insider Shares Bought is close to zero a quarter.
Insider Shares Sold is steady at about 1/2 million shares a quarter.
3 Mo. 12 Mo.
# of Shares Bought 0 379,225
# of Shares Sold 496,238 1,920,164
https://www.nasdaq.com/symbol/zs/insider-trades
There are about 125 million shares outstanding (there were about 120 million shares outstanding a year ago).
So crime does pay in many cases. And it sounds like white collar cyber crime is a good way to go for a talented criminal.
How often do these guys get caught?. If caught how often are they convicted? If convicted do they do hard time with violent felons as roommates or do they serve it in a comfy minimum security prison sharing cells with Ponzi scheme wall streeters? I assume many of these cyber criminals are located outside the country in places like Iran or China, and virtually immune from arrest
Some stupid illiterate selling a few joints on a street corner , MJ that is legal in the nearby states, probably is at greater risk of incarceration.
Insurance premiums doubled in two years, that is a fantastic growth rate, which eventually should be reflected in growth rates of security software. I suspect municipalities and other institutions and businesses with historical low salaries are having lots of trouble attracting talented programmers and IT managers, so the anti hacking security software that is easiest to set up and to maintain should be in high demand. And that would probably be cloud based.