NextEd Group Insiders Who Sold Avert AU$47m Market Cap Dip

Insiders seem to have made the most of their holdings by selling AU$1.6m worth of NextEd Group Limited (ASX:NXD) stock at an average sell price of AU$1.12 during the past year. The company's market valuation decreased by AU$47m after the stock price dropped 15% over the past week, but insiders were spared from painful losses.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we do think it is perfectly logical to keep tabs on what insiders are doing.

View our latest analysis for NextEd Group

NextEd Group Insider Transactions Over The Last Year

In the last twelve months, the biggest single sale by an insider was when the Independent Non-Executive Director, Simon Tolhurst, sold AU$1.6m worth of shares at a price of AU$1.12 per share. That means that even when the share price was below the current price of AU$1.24, an insider wanted to cash in some shares. As a general rule we consider it to be discouraging when insiders are selling below the current price, because it suggests they were happy with a lower valuation. Please do note, however, that sellers may have a variety of reasons for selling, so we don't know for sure what they think of the stock price. It is worth noting that this sale was 87% of Simon Tolhurst's holding. Simon Tolhurst was the only individual insider to sell shares in the last twelve months. Notably Simon Tolhurst was also the biggest buyer, having purchased AU$311k worth of shares.

Happily, we note that in the last year insiders paid AU$311k for 286.26k shares. But they sold 1.43m shares for AU$1.6m. 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!

I will like NextEd Group better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.

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 16% of NextEd Group shares, worth about AU$44m. 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 Does This Data Suggest About NextEd Group Insiders?

The fact that there have been no NextEd Group insider transactions recently certainly doesn't bother us. Still, the insider transactions at NextEd Group in the last 12 months are not very heartening. But it's good to see that insiders own shares in the company. Therefore, you should definitely take a look at this FREE report showing analyst forecasts for NextEd Group.

But note: NextEd 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.

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. 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.