Insider buying is often regarded as a bullish indicator, as few people should know a company better than its own directors.
The theory is that if they have the confidence to buy shares, it could be a sign that things are going well and they expect them to appreciate in value.
Conversely, when directors sell shares it is often regarded as a bearish indicator as you’d be unlikely to sell shares if you felt they were about to increase in value.
With that in mind, here are three shares which have recently experienced notable insider selling:
Accent Group Ltd (ASX: AX1)
A series of change of director’s interest notices reveal that the co-founder and non-executive director of this footwear retailer, Michael Hapgood, has continued to sell a large number of shares on-market. Mr Hapgood sold 161,000 shares on May 23, 129,000 shares on May 27, and 150,000 shares on May 28. This followed a sale of 131,425 shares on May 14. The director received a total of just over $900,000 for the shares, equating to an average of ~$1.59 per share. While this was a large number of shares, it is worth noting that Mr Hapgood remains a major shareholder with a total of 14 milllion shares.
Australian Ethical Investment Limited (ASX: AEF)
The managing director of this fund manager, Phillip Vernon, has been selling shares on market recently. According to the change of director’s interest notice, Mr Vernon sold a total of 55,000 shares through a series of on-market trades over a period of five trading days ending May 24. The director received an average of $2.00 per share or a total consideration of $110,000. This reduced his holding to 1,321,000 shares and 155,560 deferred fully paid shares.
Xero Limited (ASX: XRO)
One of this cloud-based business and accounting software provider’s non-executive directors has offloaded a large number of shares this week. According to a change of director’s interest notice, Craig Winkler sold 750,000 Xero shares through an on-market trade on May 27. Mr Winkler received an average of $59.755 per share, which equates to a total consideration of $44,816,505. However, before you panic, it is worth noting that these shares were held by Givia Pty Limited, which is Mr Winkler’s charitable trust.
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James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Australian Ethical Investment Ltd. The Motley Fool Australia owns shares of Xero. The Motley Fool Australia has recommended Accent Group. 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.