We often see insiders buying up shares in companies that perform well over the long term. The flip side of that is that there are more than a few examples of insiders dumping stock prior to a period of weak performance. So before you buy or sell Rent.com.au Limited (ASX:RNT), 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, such insiders must disclose their trading activities, and not trade on inside information.
We don’t think shareholders should simply follow insider transactions. But it is perfectly logical to keep tabs on what insiders are doing. For example, a Harvard University study found that ‘insider purchases earn abnormal returns of more than 6% per year.’
The Last 12 Months Of Insider Transactions At Rent.com.au
In the last twelve months, the biggest single purchase by an insider was when Jason Carroll bought AU$401k worth of shares at a price of AU$0.09 per share. That means that even when the share price was higher, an insider wanted to purchase shares. Their view may have changed since then, but at least it shows they felt optimistic at the time. It’s not at all bad to see insiders buy shares at or above current prices.
Over the last year, we can see that insiders have bought 16.90m shares worth AU$1.3m. But insiders sold 587.77k shares worth AU$31k. Overall, Rent.com.au insiders were net buyers last year. Their average price was about AU$0.074. I’d consider this a positive as it suggests insiders see value at around the current price, which is AU$0.041. You can see the insider transactions (by 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!
There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of growing companies that insiders are buying.
Insiders at Rent.com.au Have Bought Stock Recently
Over the last three months, we’ve seen significant insider buying at Rent.com.au. Specifically, Jason Carroll bought AU$126k worth of shares in that time, and we didn’t record any sales whatsoever. This is a positive in our book as it implies some confidence.
Many investors like to check how much of a company is owned by 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 39% of Rent.com.au shares, worth about AU$3.7m. We’ve certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.
So What Does This Data Suggest About Rent.com.au Insiders?
It is good to see recent insider purchase. And an analysis of the transactions over the last year also gives us confidence. But on the other hand, the company made a loss last year, which makes us a little cautious. Given that insiders also own a fair bit of Rent.com.au we think they are probably pretty confident of a bright future. I like to dive deeper into how a company has performed in the past. You can find historic revenue and earnings in this detailed graph.
Of course Rent.com.au may not be the best stock to buy. So you may wish to see this free collection of high quality companies.
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