Cybersecurity Insider Buyers: An Extremely Rare Phenomenon – Deep Dive 2025
Executive Summary
- A new study covering 19 publicly traded cybersecurity names finds that insider buying is virtually non‑existent in the space.
- Only five companies — Elastic, Fortinet, Qualys, CISO Global and Radware — have seen open‑market insider purchases since 2023.
- The scarcity of buys contrasts sharply with heavy stock‑based compensation, raising questions about alignment between management and shareholders.
— Perplexity Research, Cybersecurity Insider Buyers: An Extremely Rare Phenomenon (Jun‑2025)
1. Why Insider Buying Matters
Insider transactions can be a powerful signal because executives possess intimate knowledge of product pipelines, customer churn and competitive dynamics. Academic literature shows that clusters of insider buys often precede above‑average returns, especially in growth industries. In a sector where valuations routinely exceed 10× forward sales, any indication that management believes shares are undervalued deserves close attention.
2. Company‑by‑Company Breakdown
Elastic N.V. (ESTC)
✔ CEO Ash Kulkarni acquired 5,000 shares at ~$110 in March 2025, citing confidence in the company’s AI‑powered security analytics. The purchase represents the first CEO buy since Elastic went public in 2018.
Fortinet (FTNT)
✔ Co‑founder and Executive Chairman Ken Xie bought $2.4 million worth of stock after shares slid 18% post‑earnings. The move suggests management views the pullback as overdone relative to long‑term demand for OT security.
Qualys (QLYS)
✔ Director Sumedh Thakar added 3,000 shares in January 2025. Qualys trades at a discount to peers on an EV/EBITDA basis, making insider conviction noteworthy.
CISO Global (CISO)
✔ Multiple small purchases by board members signal belief in the firm’s turnaround plan and managed security services pivot.
Radware (RDWR)
✔ CFO Meir Moshe picked up 10,000 shares following a restructuring announcement aimed at boosting operating margins above 15% by FY‑26.
3. What Makes Insider Buying So Rare?
Sky‑High Valuations: With the median cybersecurity stock trading at 12× forward revenue, insiders may view current prices as fair or even lofty.
Stock‑Based Compensation (SBC): Generous option grants reduce the need for cash purchases and can create selling pressure when options vest.
Blackout Windows: Frequent acquisitions and quarterly reporting leave narrow windows for legal buying, further suppressing insider activity.
4. Investment Implications & Strategies
- Follow the Money: Concentrate due‑diligence on the five companies where insiders are buying; their risk‑reward profiles may be superior.
- Watch Valuation Compression: Insider buying often accelerates when multiples contract. A broad market pullback could trigger additional signals.
- Pair Trades: Consider long positions in insider‑supported names versus short exposure in peers lacking ownership conviction.
Bottom Line: Insider buying in cybersecurity remains an exception rather than the rule. When it does occur, it can highlight contrarian opportunities in a sector still poised for double‑digit growth as threat volumes rise.
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Disclaimer: This post is for educational purposes only and does not constitute financial advice. Always perform your own research before making investment decisions.