Possible Bearish Signals With NatWest Group Insiders Disposing Stock

The fact that multiple NatWest Group plc (LON:NWG) insiders offloaded a considerable amount of shares over the past year could have raised some eyebrows amongst investors. When analyzing insider transactions, it is usually more valuable to know whether insiders are buying versus knowing if they are selling, as the latter sends an ambiguous message. However, when multiple insiders sell stock over a specific duration, shareholders should take notice as that could possibly be a red flag.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we do think it is perfectly logical to keep tabs on what insiders are doing.

View our latest analysis for NatWest Group

The Last 12 Months Of Insider Transactions At NatWest Group

In the last twelve months, the biggest single sale by an insider was when the Group CFO & Executive Director, Katie Murray, sold UK£1.7m worth of shares at a price of UK£2.74 per share. So what is clear is that an insider saw fit to sell at around the current price of UK£2.61. While insider selling is a negative, to us, it is more negative if the shares are sold at a lower price. We note that this sale took place at around the current price, so it isn't a major concern, though it's hardly a good sign.

Over the last year, we can see that insiders have bought 248.50k shares worth UK£611k. But insiders sold 784.87k shares worth UK£2.1m. In total, NatWest Group insiders sold more 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!

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NatWest Group Insiders Are Selling The Stock

There was substantially more insider selling, than buying, of NatWest Group shares over the last three months. In that time, insiders dumped UK£229k worth of shares. On the other hand we note insiders bought UK£26k worth of shares. Generally this level of net selling might be considered a bit bearish.

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. We usually like to see fairly high levels of insider ownership. It appears that NatWest Group insiders own 0.09% of the company, worth about UK£20m. 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 NatWest Group Insiders?

The insider sales have outweighed the insider buying, at NatWest Group, in the last three months. And our longer term analysis of insider transactions didn't bring confidence, either. But since NatWest Group is profitable and growing, we're not too worried by this. Insiders own shares, but we're still pretty cautious, given the history of sales. We'd practice some caution before buying! So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. For example, NatWest Group has 2 warning signs (and 1 which shouldn't be ignored) we think you should know about.

But note: NatWest Group 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.