We’ve lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So before you buy or sell NewRiver REIT plc (LON:NRR), you may well want to know whether insiders have been buying or selling.
Do Insider Transactions Matter?
It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, most countries require that the company discloses such transactions to the market.
We don’t think shareholders should simply follow insider transactions. But logic dictates you should pay some attention to whether insiders are buying or selling shares. For example, a Harvard University study found that ‘insider purchases earn abnormal returns of more than 6% per year.’
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NewRiver REIT Insider Transactions Over The Last Year
Founder Allan Lockhart made the biggest insider sale in the last 12 months. That single transaction was for UK£474k worth of shares at a price of UK£2.20 each. So we know that an insider sold shares at around the present share price of UK£2.12. They might be selling for a variety of reasons, but it’s hard to argue this is a bullish sign. We generally tread carefully if insiders have been selling on market, even if they sold slightly above the current price.
In the last twelve months insiders purchased 53.27k shares for UK£148k. But they sold 277.91k for UK£603k. In total, NewRiver REIT insiders sold more than they bought over the last year. The sellers received a price of around UK£2.17, on average. We don’t gain much confidence from insider selling near the recent share price. But we don’t put too much weight on the insider selling, since sellers could have personal reasons. You can see the insider transactions (by individuals) over the last year depicted in the chart below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
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NewRiver REIT Insiders Are Selling The Stock
The last three months saw significant insider selling at NewRiver REIT. In total, insiders dumped UK£603k worth of shares in that time, and we didn’t record any purchases whatsoever. Overall this makes us a bit cautious, but it’s not the be all and end all.
Insider Ownership of NewRiver REIT
I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. Our data indicates that NewRiver REIT insiders own about UK£6.8m worth of shares (which is 1.1% of the company). We do generally prefer see higher levels of insider ownership.
So What Do The NewRiver REIT Insider Transactions Indicate?
Insiders haven’t bought NewRiver REIT stock in the last three months, but there was some selling. And our longer term analysis of insider transactions didn’t bring confidence, either. Insiders own relatively few shares in the company, and when you consider the sales, we’re not particularly excited 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.
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To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at firstname.lastname@example.org.