We’ve lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. 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 RigNet, Inc. (NASDAQ:RNET), 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.
Insider transactions are not the most important thing when it comes to long-term investing. 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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RigNet Insider Transactions Over The Last Year
Charles Davis made the biggest insider sale in the last 12 months. That single transaction was for US$161k worth of shares at a price of US$13.73 each. That means that even when the share price was slightly below the current price of US$13.76, an insider wanted to cash in some shares. While sellers have a variety of reasons for selling, this isn’t particularly great to see. When an insider sells below the current price, it does tend to make us wonder about the current valuation. Please note, however, that this single sale was just 37.1% of Charles Davis’s stake.
We note that in the last year insiders divested 30.17k shares for a total of US$428k. All up, insiders sold more shares in RigNet than they bought, over the last year. The average sell price was around US$14.18. It’s not particularly great to see insiders were selling shares around current prices. While some insiders have decided to take some money off the table, we wouldn’t put too much weight on this fact. The chart below shows insider transactions (by individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
I will like RigNet better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
Insiders at RigNet Have Sold Stock Recently
The last quarter saw substantial insider selling of RigNet shares. In total, insiders dumped US$96k 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.
Does RigNet Boast High Insider Ownership?
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. I reckon it’s a good sign if insiders own a significant number of shares in the company. From looking at our data, insiders own US$4.5m worth of RigNet stock, about 1.5% of the company. We prefer to see high levels of insider ownership.
What Might The Insider Transactions At RigNet Tell Us?
Insiders sold RigNet shares recently, but they didn’t buy any. And there weren’t any purchases to give us comfort, over the last year. When you combine this with the relatively low insider ownership, we are very cautious about the stock. As the saying goes, only fools rush in. Therefore, you should should definitely take a look at this FREE report showing analyst forecasts for RigNet.
If you would prefer to check out another company — one with potentially superior financials — then do not miss this free list of interesting companies, that have HIGH return on equity and low debt.
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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.