This Insider Has Just Sold Shares In ReadCloud Limited (ASX:RCL)

We wouldn't blame ReadCloud Limited (ASX:RCL) shareholders if they were a little worried about the fact that John Pollaers, a company insider, recently netted about AU$2.4m selling shares at an average price of AU$0.46. That diminished their holding by a very significant 100%, which arguably implies a strong desire to reallocate capital.

See our latest analysis for ReadCloud

ReadCloud Insider Transactions Over The Last Year

Notably, that recent sale by John Pollaers is the biggest insider sale of ReadCloud shares that we've seen in the last year. That means that even when the share price was below the current price of AU$0.60, an insider wanted to cash in some shares. As a general rule we consider it to be discouraging when insiders are selling below the current price, because it suggests they were happy with a lower valuation. However, while insider selling is sometimes discouraging, it's only a weak signal. It is worth noting that this sale was 100% of John Pollaers's holding.

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

If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.

Does ReadCloud Boast High 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. 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 ReadCloud insiders own 40% of the company, worth about AU$23m. 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 ReadCloud Insiders?

An insider hasn't bought ReadCloud stock in the last three months, but there was some selling. Looking to the last twelve months, our data doesn't show any insider buying. While insiders do own shares, they don't own a heap, and they have been selling. We'd practice some caution before buying! While we like knowing what's going on with the insider's ownership and transactions, we make sure to also consider what risks are facing a stock before making any investment decision. To assist with this, we've discovered 4 warning signs that you should run your eye over to get a better picture of ReadCloud.

But note: ReadCloud 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.

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.

If you decide to trade ReadCloud, use the lowest-cost* platform that is rated #1 Overall by Barron’s, Interactive Brokers. Trade stocks, options, futures, forex, bonds and funds on 135 markets, all from a single integrated account. Promoted

This article by Simply Wall St is general in nature. 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.
^*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.