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Technology One Limited (ASX:TNE) share price sinks lower on insider sale reports

One of the worst performers on the ASX 200 this morning has been the Technology One Limited (ASX: TNE) share price.

At the time of writing the software company’s shares are down 6.5% to $5.52.

Why are Technology One’s shares sinking lower today?

Technology One’s shares have come under pressure today after its emerged that the company’s management team were offloading a sizeable chunk of their shares.

According to the AFR, on Thursday UBS was in the market looking to offload $44 million worth of shares at a discount of $5.55.

The company has yet to confirm the report or file a change of director’s interests notice. However, there was a significant lift in volume yesterday with over 9.9 million shares changing hands. This compares to the monthly average of ~900,000 shares.

Interestingly, just two days earlier major shareholder Hyperion Asset Management offloaded 3.3 million shares. This reduced the asset manager’s holding down from approximately 11% to 9.9%.

Should you be selling?

Insider selling rarely goes down well with investors. You only need to look at the performance of the Kogan.com Ltd (ASX: KGN) share price since its last bout of insider selling to see why.

The ecommerce company’s CEO and chairman sold 4.5 million and 1.75 million shares, respectively, for an average price of $6.41 at the start of September.

Since then the company’s performance has taken a dive and its shares are priced at just $2.83. This is 55% lower than the price that these directors sold at.

All being well, if its directors have been selling, Technology One will release a decent explanation for the selling along with the change of director’s interest notice.

But until then, I’ll be staying away from Technology One’s shares. Not least because at 34x trailing earnings I think they look quite expensive.

In the meantime, I would sooner buy Appen Ltd (ASX: APX) or Altium Limited (ASX: ALU) shares.

Alternatively, these growing tech shares could be even better options.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Altium and Appen Ltd. The Motley Fool Australia has recommended Kogan.com ltd. 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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