Nick Scali Insiders Sell AU$2.7m Of Stock, Possibly Signalling Caution

Over the past year, many Nick Scali Limited (ASX:NCK) insiders sold a significant stake in the company which may have piqued investors' interest. When evaluating insider transactions, knowing whether insiders are buying is usually more beneficial than knowing whether they are selling, as the latter can be open to many interpretations. However, when multiple insiders sell stock over a specific duration, shareholders should take notice as that could possibly be a red flag.

While insider transactions are not the most important thing when it comes to long-term investing, logic dictates you should pay some attention to whether insiders are buying or selling shares.

See our latest analysis for Nick Scali

The Last 12 Months Of Insider Transactions At Nick Scali

The Independent Non-Executive Chairman, John Ingram, made the biggest insider sale in the last 12 months. That single transaction was for AU$2.3m worth of shares at a price of AU$14.88 each. That means that even when the share price was below the current price of AU$16.44, 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. However, while insider selling is sometimes discouraging, it's only a weak signal. This single sale was just 44% of John Ingram's stake.

All up, insiders sold more shares in Nick Scali than they bought, over the last year. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

I will like Nick Scali 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.

Insider Ownership Of Nick Scali

Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. We usually like to see fairly high levels of insider ownership. Our data suggests Nick Scali insiders own 0.3% of the company, worth about AU$4.3m. However, it's possible that insiders might have an indirect interest through a more complex structure. I generally like to see higher levels of ownership.

So What Does This Data Suggest About Nick Scali Insiders?

There haven't been any insider transactions in the last three months -- that doesn't mean much. Our analysis of Nick Scali insider transactions leaves us unenthusiastic. And we're not picking up on high enough insider ownership to give us any comfort. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Nick Scali. To assist with this, we've discovered 1 warning sign that you should run your eye over to get a better picture of Nick Scali.

Of course Nick Scali may not be the best stock to buy. So you may wish to see this free collection of high quality companies.

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.