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:
Bapcor Ltd (ASX: BAP)
According to a change of director’s interest notice, this auto parts company’s CEO and managing director has been selling shares. The notice reveals that Darryl Abotomey offloaded 305,790 shares through an on-market trade this month. Mr Abotomey received an average of $7.21 per share, which equates to a total consideration of ~$2.2 million. The company advised that “the share sale was undertaken to predominantly cover tax liability incurred as a result of shares previously issued to him under the LTIP.” It also noted that the CEO ”remains fully committed to Bapcor’s business and success.” Mr Abotomey still has a considerable holding.
Karoon Energy Ltd (ASX: KAR)
A change of director’s interest notice reveals that the chairman of this energy company has sold a large number of shares. According to the notice, Robert Hosking sold 2,000,000 shares through an on-market trade on November 8 for a total consideration of $1,986,190. The notice advises that this was to assist in the exercise of rights under the Karoon Energy Retail Entitlement Offer Mr Hosking intends to exercise 2,060,215 rights under the offering. He still held 10,131,868 shares after the sale and prior to the offer.
Xero Limited (ASX: XRO)
One of this business and accounting software provider’s non-executive directors has sold a significant number of shares this week. According to a change of director’s interest notice, Craig Winkler sold 3 million shares through an on-market trade for a total consideration of $225 million. This works out to be an average of $75.00 per share. This sale leaves Winkler with a holding of 9,275,990 shares. It is worth noting, though, that the sale was made on behalf of his charitable trust, Givia. The executive has been selling down his holding periodically to fund his philanthropic pursuits.
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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 Bapcor. The Motley Fool Australia owns shares of Xero. 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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