Selling AU$4.0m Of EDU Holdings Stock Rewarded Insiders
While EDU Holdings Limited (ASX:EDU) shareholders have enjoyed a good week with stock up 14%, they need remain vigilant. Even though stock prices were relatively low, insiders elected to sell AU$4.0m worth of stock in the last year, which could indicate some expected downturn.
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.
The Last 12 Months Of Insider Transactions At EDU Holdings
Over the last year, we can see that the biggest insider sale was by the insider, Gary Burg, for AU$2.4m worth of shares, at about AU$0.52 per share. So it's clear an insider wanted to take some cash off the table, even below the current price of AU$1.03. As a general rule we consider it to be discouraging when insiders are selling below the current price, because it suggests they were happy with a lower 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. We note that the biggest single sale was only 26% of Gary Burg's holding.
In the last twelve months insiders purchased 3.50m shares for AU$2.2m. But insiders sold 7.44m shares worth AU$4.0m. All up, insiders sold more shares in EDU Holdings than they bought, over the last year. They sold for an average price of about AU$0.54. We don't gain confidence from insider selling below the recent share price. But we wouldn't put too much weight on the insider selling. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, 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 EDU Holdings
I will like EDU Holdings better if I see some big insider buys. While we wait, check out this free list of undervalued and small cap stocks with considerable, recent, insider buying.
Insider Ownership
For a common shareholder, it is worth checking how many shares are held by company 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. EDU Holdings insiders own about AU$46m worth of shares. That equates to 35% of the company. While this is a strong but not outstanding level of insider ownership, it's enough to indicate some alignment between management and smaller shareholders.
So What Do The EDU Holdings Insider Transactions Indicate?
It doesn't really mean much that no insider has traded EDU Holdings shares in the last quarter. Still, the insider transactions at EDU Holdings in the last 12 months are not very heartening. But it's good to see that insiders own shares in the company. While it's good to be aware of what's going on with the insider's ownership and transactions, we make sure to also consider what risks are facing a stock before making any investment decision. Case in point: We've spotted 1 warning sign for EDU Holdings you should be aware of.
If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, that have HIGH return on equity and low debt.
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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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.