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REA Group Limited (ASX:REA) CEO sells $911,490 of shares, time to worry?

One of the most worrying things as an investor is seeing management sell shares, as share price falls usually occur afterwards and sometimes bad news comes out. Just think about recently about Kogan.Com Ltd (ASX: KGN) and Medical Developments International Ltd (ASX: MVP).

Yesterday, after the market had closed, at 5:46PM REA Group Limited (ASX: REA) announced a change of director’s notice. Within it, it was revealed that chief executive officer Tracey Fellows had sold all but 12 of her shares in an on-market trade on 17 August 2018.

This represented 10,206 shares being sold for a total of $911,490.06, which works out to be $89.31 per share.

The AFR quoted a REA spokesman saying that the sale was made for personal reasons at a time when the market was fully informed.

So, what does this mean?

Without knowing what those personal reasons are we can only speculate. The company hasn’t announced that Ms Fellows is resigning, so she appears to be staying on as CEO.

The CEO suddenly choosing now to sell hopefully doesn’t mean anything. The REA Group share price has been a very strong performer over the years and it’s currently near its all-time high.

We are also seeing the housing market in the key cities of Melbourne and Sydney start to fall over, which some argue could hurt REA Group if the number of listings dry up if people become unwilling sellers.

REA Group is currently trading at around 35x FY19’s estimated earnings, which is a high price. If I owned REA Group shares I’d consider taking some profits off the table at this point. Rising interest rates could also dampen excitement around growth shares like REA Group.

Instead, I’d rather buy nicely-valued growing businesses like these top blue chips that could be a much better choice than REA Group over the next year.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia has recommended ltd and REA Group 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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