It is not uncommon to see companies perform well in the years after insiders buy shares. 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 before you buy or sell RingCentral, Inc. (NYSE:RNG), you may well want to know whether insiders have been buying or selling.
What Is Insider Buying?
It’s quite normal to see company insiders, such as board members, trading in company stock, from time to time. However, such insiders must disclose their trading activities, and not trade on inside information.
We don’t think shareholders should simply follow insider transactions. But equally, we would consider it foolish to ignore insider transactions altogether. 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 RingCentral
In the last twelve months, the biggest single sale by an insider was when Chief Strategy Officer Praful Shah sold US$525k worth of shares at a price of US$95.05 per share. That is hardly a positive sign, even though it took place above the latest price (US$70.41). So it is hard to draw any strong conclusion from it.
In the last twelve months insiders netted US$1.6m for 20.56k shares sold. In total, RingCentral insiders sold more than they bought over the last year. They sold for an average price of about US$79.52. We don’t gain much confidence from insider selling near the recent share price of US$70.41. But we don’t put too much weight on the insider selling, since sellers could have personal reasons. The chart below shows insider transactions over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!
I will like RingCentral better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
RingCentral Insiders Are Selling The Stock
Over the last three months, we’ve seen significant insider selling at RingCentral. In total, Director Michelle McKenna-Doyle sold US$431k worth of shares in that time, and we didn’t record any purchases whatsoever. This may suggest that some insiders think that the shares are not cheap.
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. RingCentral insiders own about US$776m worth of shares (which is 14% of the company). Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.
So What Do The RingCentral Insider Transactions Indicate?
An insider hasn’t bought RingCentral stock in the last three months, but there was some selling. And there weren’t any purchases to give us comfort, over the last year. While insiders do own a lot of shares in the company (which is good), our analysis of their transactions doesn’t make us feel confident about the company. Therefore, you should should definitely take a look at this FREE report showing analyst forecasts for RingCentral.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.
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 email@example.com.