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:
Ausnet Services Ltd (ASX: AST)
According to a change of director’s interest notice, one of this energy supplier’s directors has been selling a large number of shares on-market recently. The notice reveals that its non-executive director, Tan Chee Meng, sold 50,000 shares for an average of $1.88 per share on June 13 and then a further 50,000 shares for an average of $1.90 per share on June 14. This equates to an average of $1.89 per share or a total consideration of $189,000. The share sales have cut the director’s holding down by two-thirds, leaving him with just 50,000 shares now. Earlier this week the Ausnet share price reached an all-time high of $1.98.
IDP Education Ltd (ASX: IEL)
A change of director’s interest notice reveals that one of the directors of this education services provider has offloaded half of his shares through an on-market trade this week. According to the notice, non-executive director Greg West sold 25,000 shares through an on-market trade on June 17. Mr West received a total consideration of $445,485 for the sale. IDP Education’s shares have been on fire this year thanks to an impressive half year result and were up over 87% year to date on the day of the sale.
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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.