Insiders Could Have Profited By Holding onto SOCO Shares Despite 14% Drop

Even though SOCO Corporation Ltd (ASX:SOC) has fallen by 14% over the past week , insiders who sold AU$1.5m worth of stock over the past year have had less luck. Insiders would probably have been better off holding on to their shares given that the average selling price of AU$0.081 is still lower than the current share price.

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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SOCO Insider Transactions Over The Last Year

The insider, Carlo Liviani, made the biggest insider sale in the last 12 months. That single transaction was for AU$1.4m worth of shares at a price of AU$0.08 each. We generally don't like to see insider selling, but the lower the sale price, the more it concerns us. The good news is that this large sale was at well above current price of AU$0.062. So it may not tell us anything about how insiders feel about the current share price.

In the last twelve months insiders purchased 1.73m shares for AU$140k. On the other hand they divested 19.10m shares, for AU$1.5m. All up, insiders sold more shares in SOCO than they bought, over the last year. 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!

View our latest analysis for SOCO

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

Insiders At SOCO Have Bought Stock Recently

Over the last three months, we've seen a bit of insider buying at SOCO. Founder Sebastian Rizzo bought AU$60k worth in that time. However, Founder Thomas Rock netted AU$30k for sales. It is nice to see that insiders have bought, but the quantum isn't large enough to get us excited.

Insider Ownership Of SOCO

For a common shareholder, it is worth checking how many shares are held by company 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. Insiders own 32% of SOCO shares, worth about AU$2.8m. While this is a strong but not outstanding level of insider ownership, it's enough to indicate some alignment between management and smaller shareholders.

So What Do The SOCO Insider Transactions Indicate?

Our data shows a little insider buying, but no selling, in the last three months. That said, the purchases were not large. We're a little cautious about the insider selling at SOCO. But we do like the fact that insiders own a fair chunk of the company. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing SOCO. At Simply Wall St, we've found that SOCO has 5 warning signs (4 are potentially serious!) that deserve your attention before going any further with your analysis.

But note: SOCO 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 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.