On Thursday I had a look at a few companies that had experienced significant insider buying in recent days.
As directors arguably know their companies better than anyone, insider buying is usually viewed as a bullish signal.
Today I thought I would look at three companies which have experienced insider selling recently. This is usually interpreted as a bearish signal and a reason to be cautious.
Gateway Lifestyle Group (ASX: GTY)
According to a change of director’s interests notice earlier this month, the retirement community company’s managing director and CEO has been selling shares this week. Trent Ottawa sold 2.25 million shares for a total of $4.3 million. The sizeable sale was made so that Mr Ottawa could meet “expected tax obligations.” He still holds approximately 10.6 million shares after the sale and remains “fully committed to the long-term goals and growth of the Group.”
SEEK Limited (ASX: SEK)
According to a release yesterday, CEO and co-founder Andrew Basset has sold 500,000 on-market for a combined value of approximately $10.3 million. This was done in order to fund the purchase of 672,348 long-term incentive options for a combined price of $6.98 million and personal tax obligations. The net impact of these transactions has actually increased Mr Bassat’s ownership by 172,348 shares to 14,443,168.
Slater & Gordon Limited (ASX: SGH)
A change of director’s interests notice filed this week reveals that the embattled law firm’s CEO Hayden Stephens has offloaded $124,381.72 worth of shares through an on-market trade. This has reduced Mr Stephens’ holding from 42,552 shares to just 12,526 shares. Interestingly, Slater & Gordon has been repeatedly warning shareholders that its share price could be overvalued. KPMG has reportedly valued it at between 30 cents and $1.10 per share, whereas its share price currently stands at a lofty $3.64. I think shareholders ought to consider following Mr Stephens’ lead.
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Motley Fool contributor James Mickleboro owns shares of SEEK Limited. The Motley Fool Australia has recommended SEEK Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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