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 two shares which have recently experienced notable insider selling:
Pushpay Holdings Ltd (ASX: PPH)
According to a change of director’s interest notice, this payment company’s co-founder and non-executive director, Chris Heaslip, has offloaded 12.24 million Pushpay shares this week. No reason was given for the sale by Mr Heaslip, who resigned from the position of chief executive officer in May. However, the company advised that it expects the sell down to provide further free float and liquidity to support Pushpay’s index weightings. The sell down was underwritten and completed at NZ$3.70 per share, which was a 2.4% discount to the last close price and equated to a total consideration of NZ$45.3 million. The former CEO still holds a sizeable number of shares in the company despite this sale.
Technology One Limited (ASX: TNE)
A change of director’s interest notice reveals that a non-executive director of this software company has been selling shares this week. According to the notice, Kevin Blinco sold 60,000 Technology One shares through an on-market trade on July 4. The director received a total consideration of $485,061.03 for the shares, which equates to an average of $8.08 per share. This sale reduced Mr Blinco’s holding down to 200,000 shares. This is the second insider trade in as many weeks. At the end of last month fellow non-executive director Sharon Doyle bought 12,375 shares through an on-market trade for a total consideration of $100,397.46.
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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 and has recommended PUSHPAY FPO NZX. 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.