Insider buying is regarded as a bullish indicator. This is because few people should know a company better than its own directors. As a result, if they have the confidence to buy shares, it could be interpreted as 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. After all, you would be unlikely to sell shares if you felt they were about to increase in value.
With that in mind, should investors be concerned by some major insider selling by the CEO of a leading ASX 200 share? Let's see what's happening.
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Which ASX 200 CEO is selling shares?
The ASX 200 share in question is energy giant Santos Ltd (ASX: STO), which has revealed that its CEO, Kevin Gallagher, has been selling shares on-market.
According to the change of director's interest notice, Gallagher offloaded a total of 600,000 Santos shares through on-market trades across 7 September and 8 September.
The company's CEO received an average of $7.811656 per share for a parcel of 400,000 shares and then an average of $7.763121 per share for a parcel of 200,000 shares. This represents considerations of approximately $3.124 million and $1.552 million, respectively, and a total sale value of just under $4.7 million.
The release notes that the ASX 200 share's CEO offloaded these shares "as part of a reorganisation of personal financial matters."
Following the sale, Gallagher is left owning approximately 1.5 million Santos shares along with over 3 million share rights and restricted shares.
All in all, given the reason behind the sale and the size of his remaining holding, this insider selling doesn't seem to be anything to worry about. I would be more concerned about a director at Megaport Ltd (ASX: MP1) selling off their entire holding last week after the ASX 200 tech share more than doubled in value in six months.
