We’ve lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. 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’s quite normal to see company insiders, such as board members, trading in company stock, from time to time. 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 equally, we would consider it foolish to ignore insider transactions altogether. For example, a Colombia 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’.
See our latest analysis for Rent.com.au
The Last 12 Months Of Insider Transactions At Rent.com.au
Jason Carroll made the biggest insider purchase in the last 12 months. That single transaction was for AU$401k worth of shares at a price of AU$0.09 each. That means that even when the share price was higher, an insider wanted to purchase shares. While their view may have changed since the purchase was made, this does at least suggest they have had confidence in the company’s future. That purchase may suggest an expectation of positive returns over the long term.
In the last twelve months insiders purchased 15.62m shares for AU$1.2m. But insiders sold 587.77k shares worth AU$31k. In total, Rent.com.au insiders bought more than they sold over the last year. Their average price was about AU$0.077. This is nice to see since it implies that insiders might see value around current prices (around AU$0.05). You can see a visual depiction of insider transactions over the last 12 months, below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).
Insiders at Rent.com.au Have Bought Stock Recently
At Rent.com.au,over the last quarter, we have observed quite a lot more insider buying than insider selling. Chief Executive Officer Greg Bader spent AU$108k on stock. But Martin Grehan sold shares worth AU$31k. The buying outweighs the selling, which suggests that insiders may believe the company will do well in the future.
Insider Ownership
I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. It’s great to see that Rent.com.au insiders own 38% of the company, worth about AU$4.4m. I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.
So What Does This Data Suggest About Rent.com.au Insiders?
It’s certainly positive to see the recent insider purchase. We also take confidence from the longer term picture of insider transactions. But on the other hand, the company made a loss last year, which makes us a little cautious. Insiders likely see value in Rent.com.au shares, given these transactions (along with notable insider ownership of the company). I like to dive deeper into how a company has performed in the past. You can access this interactive graph of past earnings, revenue and cash flow for free .
But note: Rent.com.au 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.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.