We often see insiders buying up shares in companies that perform well over the long term. On the other hand, we'd be remiss not to mention that insider sales have been known to precede tough periods for a business. So we'll take a look at whether insiders have been buying or selling shares in NewRiver REIT plc (LON:NRR).
What Is Insider Selling?
It's quite normal to see company insiders, such as board members, trading in company stock, from time to time. However, most countries require that the company discloses such transactions to the market.
We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. But it is perfectly logical to keep tabs on what insiders are doing. As Peter Lynch said, 'insiders might sell their shares for any number of reasons, but they buy them for only one: they think the price will rise.'
The Last 12 Months Of Insider Transactions At NewRiver REIT
Over the last year, we can see that the biggest insider sale was by the Founder, Allan Lockhart, for UK£474k worth of shares, at about UK£2.20 per share. We generally don't like to see insider selling, but the lower the sale price, the more it concerns us. It's of some comfort that this sale was conducted at a price well above the current share price, which is UK£1.67. So it is hard to draw any strong conclusion from it.
Over the last year, we can see that insiders have bought 31286 shares worth UK£61k. On the other hand they divested 353k shares, for UK£723k. In total, NewRiver REIT insiders sold more than they bought over the last year. The chart below shows insider transactions (by individuals) over the last year. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.
NewRiver REIT Insiders Are Selling The Stock
There was substantially more insider selling, than buying, of NewRiver REIT shares over the last three months. In total, Allan Lockhart sold UK£120k worth of shares in that time. On the flip side, insiders spent UK£61k on purchasing shares (as mentioned above). We don't view these transactions as a positive sign.
Insider Ownership of NewRiver REIT
For a common shareholder, it is worth checking how many shares are held by company insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. From our data, it seems that NewRiver REIT insiders own 1.1% of the company, worth about UK£5.5m. We do generally prefer see higher levels of insider ownership.
What Might The Insider Transactions At NewRiver REIT Tell Us?
The stark truth for NewRiver REIT is that there has been more insider selling than insider buying in the last three months. Despite some insider buying, the longer term picture doesn't make us feel much more positive. When you combine this with the relatively low insider ownership, we are very cautious about the stock. We'd certainly think twice before buying! If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its future.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.
For the purposes of this article, insiders are those individuals who report their transactions to the relevant regulatory body. We currently account for open market transactions and private dispositions, but not derivative transactions.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.