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Don't Ignore The Fact That This Insider Just Sold Some Shares In Pacific Smiles Group Limited (ASX:PSQ)

Simply Wall St

Some Pacific Smiles Group Limited (ASX:PSQ) shareholders may be a little concerned to see that the Non Executive Director, Alexander Abrahams, recently sold a whopping AU$3.0m worth of stock at a price of AU$1.50 per share. However, it's crucial to note that they remain very much invested in the stock and that sale only reduced their holding by 5.6%.

View our latest analysis for Pacific Smiles Group

The Last 12 Months Of Insider Transactions At Pacific Smiles Group

Notably, that recent sale by Alexander Abrahams is the biggest insider sale of Pacific Smiles Group shares that we've seen in the last year. That means that even when the share price was below the current price of AU$1.55, an insider wanted to cash in some shares. We generally consider it a negative if insiders have been selling, especially if they did so below the current price, because it implies that they considered a lower price to be reasonable. However, while insider selling is sometimes discouraging, it's only a weak signal. It is worth noting that this sale was only 5.6% of Alexander Abrahams's holding.

Over the last year, we can see that insiders have bought 300690 shares worth AU$398k. But insiders sold 4500000 shares worth AU$6.1m. Alexander Abrahams divested 4500000 shares over the last 12 months at an average price of AU$1.34. 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!

ASX:PSQ Recent Insider Trading, October 6th 2019

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Insider Ownership of Pacific Smiles Group

Many investors like to check how much of a company is owned by insiders. We usually like to see fairly high levels of insider ownership. Pacific Smiles Group insiders own about AU$106m worth of shares (which is 45% of the company). I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.

What Might The Insider Transactions At Pacific Smiles Group Tell Us?

Unfortunately, there has been more insider selling of Pacific Smiles Group stock, than buying, in the last three months. Zooming out, the longer term picture doesn't give us much comfort. But since Pacific Smiles Group is profitable and growing, we're not too worried by this. It is good to see high insider ownership, but the insider selling leaves us cautious. Therefore, you should should definitely take a look at this FREE report showing analyst forecasts for Pacific Smiles Group.

But note: Pacific Smiles Group may not be the best stock to buy. So take a peek at this free list of interesting companies with high ROE and low debt.

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 editorial-team@simplywallst.com. 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.