Don't Ignore The Insider Selling In Southern Cross Electrical Engineering

Some Southern Cross Electrical Engineering Limited (ASX:SXE) shareholders may be a little concerned to see that insider Gianfranco Tomasi recently sold a substantial AU$7.1m worth of stock at a price of AU$1.88 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 8.0%.

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The Last 12 Months Of Insider Transactions At Southern Cross Electrical Engineering

Notably, that recent sale by Gianfranco Tomasi is the biggest insider sale of Southern Cross Electrical Engineering shares that we've seen in the last year. That means that even when the share price was slightly below the current price of AU$2.29, an insider wanted to cash in some shares. When an insider sells below the current price, it suggests that they considered that lower price to be fair. That makes us wonder what they think of the (higher) recent valuation. While insider selling is not a positive sign, we can't be sure if it does mean insiders think the shares are fully valued, so it's only a weak sign. This single sale was just 8.0% of Gianfranco Tomasi's stake.

The chart below shows insider transactions (by companies and 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!

Check out our latest analysis for Southern Cross Electrical Engineering

If you like to buy stocks that insiders are buying, rather than selling, then you might just love this free list of companies. (Hint: Most of them are flying under the radar).

Insider Ownership Of Southern Cross Electrical Engineering

For a common shareholder, it is worth checking how many shares are held by company insiders. 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 24% of Southern Cross Electrical Engineering shares, worth about AU$144m. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.

What Might The Insider Transactions At Southern Cross Electrical Engineering Tell Us?

The insider sales have outweighed the insider buying, at Southern Cross Electrical Engineering, in the last three months. And our longer term analysis of insider transactions didn't bring confidence, either. On the plus side, Southern Cross Electrical Engineering makes money, and is growing profits. 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. So while it's helpful to know what insiders are doing in terms of buying or selling, it's also helpful to know the risks that a particular company is facing. You'd be interested to know, that we found 1 warning sign for Southern Cross Electrical Engineering and we suggest you have a look.

But note: Southern Cross Electrical Engineering 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 of direct interests only, but not derivative transactions or indirect interests.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.