Stock Analysis

Co-Founder & Non-Executive Director Richard Wenzel Just Sold A Bunch Of Shares In Nitro Software Limited (ASX:NTO)

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ASX:NTO
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Some Nitro Software Limited (ASX:NTO) shareholders may be a little concerned to see that the Co-Founder & Non-Executive Director, Richard Wenzel, recently sold a substantial AU$18m worth of stock at a price of AU$2.31 per share. That diminished their holding by a very significant 82%, which arguably implies a strong desire to reallocate capital.

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Nitro Software Insider Transactions Over The Last Year

Notably, that recent sale by Richard Wenzel is the biggest insider sale of Nitro Software shares that we've seen in the last year. That means that an insider was selling shares at slightly below the current price (AU$2.68). 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. While insider selling is not a positive sign, we can't be sure if it does mean insiders think the shares are fully valued, so it's only a weak sign. It is worth noting that this sale was 82% of Richard Wenzel's holding.

You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

insider-trading-volume
ASX:NTO Insider Trading Volume March 16th 2021

If you like to buy stocks that insiders are buying, rather than selling, then you might just love this free list of companies. (Hint: insiders have been buying them).

Does Nitro Software Boast High 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. Nitro Software insiders own about AU$77m worth of shares. That equates to 16% of the company. 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 Nitro Software Insiders?

An insider sold Nitro Software shares recently, but they didn't buy any. And there weren't any purchases to give us comfort, over the last year. Insider ownership isn't particularly high, so this analysis makes us cautious about the company. So we'd only buy after careful consideration. So while it's helpful to know what insiders are doing in terms of buying or selling, it's also helpful to know the risks that a particular company is facing. You'd be interested to know, that we found 2 warning signs for Nitro Software and we suggest you have a look.

Of course Nitro Software 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, but not derivative transactions.

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