Insiders Who Sold AU$3.9m Of Desane Group Holdings Made The Right Call

While Desane Group Holdings Limited (ASX:DGH) shareholders have enjoyed a good week with stock up 10%, they need remain vigilant. The fact that insiders chose to dispose of AU$3.9m worth of stock in the past 12 months even though prices were relatively low could be indicative of some anticipated weakness.

Although we don't think shareholders should simply follow insider transactions, we would consider it foolish to ignore insider transactions altogether.

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The Last 12 Months Of Insider Transactions At Desane Group Holdings

Over the last year, we can see that the biggest insider sale was by the insider, Phil Montrone, for AU$3.9m worth of shares, at about AU$0.78 per share. That means that an insider was selling shares at slightly below the current price (AU$0.93). We generally consider it a negative if insiders have been selling, especially if they did so below the current price, because it implies that they considered a lower price to be reasonable. 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 only 25% of Phil Montrone's holding. Phil Montrone was the only individual insider to sell shares in the last twelve months.

The chart below shows insider transactions (by companies and individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

View our latest analysis for Desane Group Holdings

I will like Desane Group Holdings better if I see some big insider buys. While we wait, check out this free list of undervalued and small cap stocks with considerable, recent, insider buying.

Desane Group Holdings Insiders Are Selling The Stock

Over the last three months, we've seen notably more insider selling, than insider buying, at Desane Group Holdings. In total, insider Phil Montrone sold AU$3.9m worth of shares in that time. On the other hand we note Non-Executive Independent Director Peter Krejci bought AU$20k worth of shares , as previously mentioned . Since the selling really does outweigh the buying, we'd say that these transactions may suggest that some insiders feel the shares are not cheap.

Insider Ownership

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. It appears that Desane Group Holdings insiders own 39% of the company, worth about AU$15m. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.

So What Do The Desane Group Holdings Insider Transactions Indicate?

Unfortunately, there has been more insider selling of Desane Group Holdings stock, than buying, in the last three months. And our longer term analysis of insider transactions didn't bring confidence, either. While insiders do own shares, they don't own a heap, and they have been selling. So we'd only buy after careful consideration. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. At Simply Wall St, we've found that Desane Group Holdings has 7 warning signs (2 are a bit concerning!) that deserve your attention before going any further with your analysis.

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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.