Smartgroup Insiders Sold AU$11m Of Shares Suggesting Hesitancy
Over the past year, many Smartgroup Corporation Ltd (ASX:SIQ) insiders sold a significant stake in the company which may have piqued investors' interest. When analyzing insider transactions, it is usually more valuable to know whether insiders are buying versus knowing if they are selling, as the latter sends an ambiguous message. However, shareholders should take a deeper look if several insiders are selling stock over a specific time period.
While insider transactions are not the most important thing when it comes to long-term investing, we would consider it foolish to ignore insider transactions altogether.
Smartgroup Insider Transactions Over The Last Year
The MD, CEO & Executive Director, Scott Wharton, made the biggest insider sale in the last 12 months. That single transaction was for AU$11m worth of shares at a price of AU$11.55 each. That means that an insider was selling shares at slightly below the current price (AU$12.18). When an insider sells below the current price, it suggests that they considered that lower price to be fair. That makes us wonder what they think of the (higher) recent valuation. Please do note, however, that sellers may have a variety of reasons for selling, so we don't know for sure what they think of the stock price. It is worth noting that this sale was only 29% of Scott Wharton's holding.
Over the last year, we can see that insiders have bought 12.13k shares worth AU$141k. But insiders sold 946.68k shares worth AU$11m. All up, insiders sold more shares in Smartgroup than they bought, over the last year. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
View our latest analysis for Smartgroup
If you like to buy stocks that insiders are buying, rather than selling, then you might just love this free list of companies. (Hint: Most of them are flying under the radar).
Insider Ownership
Many investors like to check how much of a company is owned by insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. Smartgroup insiders own about AU$71m worth of shares. That equates to 4.5% of the company. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.
What Might The Insider Transactions At Smartgroup Tell Us?
The fact that there have been no Smartgroup insider transactions recently certainly doesn't bother us. Our analysis of Smartgroup insider transactions leaves us cautious. But it's good to see that insiders own shares in the company. So while it's helpful to know what insiders are doing in terms of buying or selling, it's also helpful to know the risks that a particular company is facing. While conducting our analysis, we found that Smartgroup has 1 warning sign and it would be unwise to ignore it.
Of course Smartgroup 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 of direct interests only, but not derivative transactions or indirect interests.
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