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 Retail Value Inc. (NYSE:RVI), you may well want to know whether insiders have been buying or selling.
What Is Insider Buying?
Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock in the 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 it is perfectly logical to keep tabs on what insiders are doing. For example, a Columbia University study found that ‘insiders are more likely to engage in open market purchases of their own company’s stock when the firm is about to reveal new agreements with customers and suppliers’.
Check out our latest analysis for Retail Value
Retail Value Insider Transactions Over The Last Year
In the last twelve months, the biggest single sale by an insider was when the insider, Katharina Otto-Bernstein, sold US$28m worth of shares at a price of US$37.84 per share. We generally don’t like to see insider selling, but the lower the sale price, the more it concerns us. The good news is that this large sale was at well above current price of US$12.88. So it may not shed much light on insider confidence at current levels.
Happily, we note that in the last year insiders paid US$51k for 4.00k shares. On the other hand they divested 1.67m shares, for US$62m. In total, Retail Value insiders sold more than they bought over the last year. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. By clicking on the graph below, you can see the precise details of each insider transaction!
For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.
Does Retail Value 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. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Insiders own 18% of Retail Value shares, worth about US$46m. While this is a strong but not outstanding level of insider ownership, it’s enough to indicate some alignment between management and smaller shareholders.
So What Do The Retail Value Insider Transactions Indicate?
There haven’t been any insider transactions in the last three months — that doesn’t mean much. Still, the insider transactions at Retail Value in the last 12 months are not very heartening. But we do like the fact that insiders own a fair chunk of the company. While we like knowing what’s going on with the insider’s ownership and transactions, we make sure to also consider what risks are facing a stock before making any investment decision. Our analysis shows 5 warning signs for Retail Value (1 can’t be ignored!) and we strongly recommend you look at them before investing.
But note: Retail Value 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.
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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. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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