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Here’s why today is a great day to buy Shine Corporate Ltd

Around midday today, shares in law firm Shine Corporate Ltd (ASX: SHJ) are trading 4.78% lower, despite the S&P/ASX 200 (INDEX^: AXJO) (ASX: XJO) trending higher.

The share price is the market’s reaction to news that founders Stephen Roche and Simon Morrison have sold down a considerable portion of their ownership in the company. The pair sold eight million shares priced at $2.50 under a managed sale process.

Individually their ownership now stands at 24.73%, meaning they hold just under 50% of the total ordinary shares on issue when combined. Despite the sell down, Chairman Tony Bella said the two directors continue to remain the largest shareholders on Shine’s registry and the release of shares will increase liquidity.

“The Founders’ decision to sell comes a year and a half after the successful listing of Shine and delivery of many growth initiatives outlined in the 2013 prospectus. Stephen and Simon remain the Company’s largest shareholders and their commitment to Shine’s future growth continues. Their personal holding is aligned with Shine’s interest and the share sale will increase the free float of shares available for sale in the market which should assist in improving liquidity in the stock.”

Since listing, shares in the company are up 78% despite today’s fall.

Should you sell too?

When it comes to insiders with ‘skin in the game’, a proverb which long-term investors rely upon is, ‘management sell shares for many reasons but they buy for just one’. However, in this instance, I believe the sell down by management does not detract away from Shine’s investment case. In fact, the increase of liquidity in the stock will benefit those investors who are looking to buy.

Indeed, given the two directors retain significant ownership in the company, I believe today’s fall provides an excellent long-term buying opportunity for savvy investors.

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Motley Fool Contributor Owen Raszkiewicz owns shares in owns shares in Shine Corporate.