Insider Sellers Might Regret Selling Step One Clothing Shares at a Lower Price Than Current Market Value

Even though Step One Clothing Limited (ASX:STP) has fallen by 10% over the past week , insiders who sold AU$28m worth of stock over the past year have had less luck. The average selling price of AU$1.70 is still lower than the current share price, or in other words, insiders would have been better off holding on to their shares.

While insider transactions are not the most important thing when it comes to long-term investing, we do think it is perfectly logical to keep tabs on what insiders are doing.

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Step One Clothing Insider Transactions Over The Last Year

In the last twelve months, the biggest single sale by an insider was when the Founder, Gregory Taylor, sold AU$28m worth of shares at a price of AU$1.70 per share. While we don't usually like to see insider selling, it's more concerning if the sales take place at a lower price. The silver lining is that this sell-down took place above the latest price (AU$0.81). So it may not tell us anything about how insiders feel about the current share price.

In the last year Step One Clothing insiders didn't buy any company stock. 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!

See our latest analysis for Step One Clothing

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Insider Ownership

Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Step One Clothing insiders own 63% of the company, currently worth about AU$92m based on the recent share price. Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.

So What Does This Data Suggest About Step One Clothing Insiders?

The fact that there have been no Step One Clothing insider transactions recently certainly doesn't bother us. While we feel good about high insider ownership of Step One Clothing, we can't say the same about the selling of shares. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. While conducting our analysis, we found that Step One Clothing has 2 warning signs and it would be unwise to ignore them.

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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.