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We often see insiders buying up shares in companies that perform well over the long term. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So we'll take a look at whether insiders have been buying or selling shares in The Royal Bank of Scotland Group plc (LON:RBS).
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, such insiders must disclose their trading activities, and not trade on inside information.
Insider transactions are not the most important thing when it comes to long-term investing. 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.'
Royal Bank of Scotland Group Insider Transactions Over The Last Year
In the last twelve months, the biggest single sale by an insider was when Christopher Marks sold UK£657k worth of shares at a price of UK£2.53 per share. So we know that an insider sold shares at around the present share price of UK£2.52. While their view may have changed since the sale, this is not a particularly positive fact. 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 158.71k shares for UK£373k. But insiders sold 416.30k shares worth UK£1.1m. Over the last year we saw more insider selling of Royal Bank of Scotland Group shares, than buying. The sellers received a price of around UK£2.68, on average. It's not too encouraging to see that insiders have sold at below the current price. But we wouldn't put too much weight on the insider selling. You can see the insider transactions (by individuals) over the last year depicted in the chart below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).
Royal Bank of Scotland Group Insiders Are Selling The Stock
There was substantially more insider selling, than buying, of Royal Bank of Scotland Group shares over the last three months. In that time, Christopher Marks dumped UK£657k worth of shares. Meanwhile insiders bought UK£450 worth. Because the selling vastly outweighs the buying, we'd say this is a somewhat bearish sign.
Insider Ownership of Royal Bank of Scotland Group
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. A high insider ownership often makes company leadership more mindful of shareholder interests. Royal Bank of Scotland Group insiders own about UK£11m worth of shares. That equates to 0.04% of the company. We've certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.
What Might The Insider Transactions At Royal Bank of Scotland Group Tell Us?
Unfortunately, there has been more insider selling of Royal Bank of Scotland Group stock, than buying, in the last three months. And our longer term analysis of insider transactions didn't bring confidence, either. But since Royal Bank of Scotland Group is profitable and growing, we're not too worried by this. Insiders own shares, but we're still pretty cautious, given the history of sales. So we'd only buy after careful consideration. 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.
But note: Royal Bank of Scotland 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.
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 email@example.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.