Selling AU$4.7m Of Stock Was Lucrative Decision For Rent.com.au Insiders
While it’s been a great week for Rent.com.au Limited (ASX:RNT) shareholders after stock gained 11%, they should consider it with a grain of salt. The fact that insiders chose to dispose of AU$4.7m worth of stock in the past 12 months even though prices were relatively low could be indicative of some anticipated weakness.
While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, logic dictates you should pay some attention to whether insiders are buying or selling shares.
Rent.com.au Insider Transactions Over The Last Year
The insider, Bevan Slattery, made the biggest insider sale in the last 12 months. That single transaction was for AU$4.7m worth of shares at a price of AU$0.04 each. That means that even when the share price was below the current price of AU$0.045, an insider wanted to cash in some shares. 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. While insider selling is not a positive sign, we can't be sure if it does mean insiders think the shares are fully valued, so it's only a weak sign. We note that the biggest single sale was 94% of Bevan Slattery's holding. Bevan Slattery was the only individual insider to sell over the last year.
In the last twelve months insiders purchased 62.61m shares for AU$3.5m. But insiders sold 117.72m shares worth AU$4.7m. 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 Rent.com.au
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Insiders At Rent.com.au Have Bought Stock Recently
It's good to see that Rent.com.au insiders have made notable investments in the company's shares. We can see that insider Andrew Frazer paid AU$1.7m for shares in the company. No-one sold. This makes one think the business has some good points.
Does Rent.com.au Boast High Insider Ownership?
For a common shareholder, it is worth checking how many shares are held by company insiders. I reckon it's a good sign if insiders own a significant number of shares in the company. Rent.com.au insiders own about AU$23m worth of shares (which is 43% of the company). I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.
So What Does This Data Suggest About Rent.com.au Insiders?
The recent insider purchase is heartening. However, the longer term transactions are not so encouraging. Overall, we'd prefer see a more sustained buying from directors, but with a significant insider holding and more recent purchases, Rent.com.au insiders are reasonably well aligned, and optimistic for the future. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Rent.com.au. For instance, we've identified 4 warning signs for Rent.com.au (1 shouldn't be ignored) you should be aware of.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting 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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