Insiders At RELX Sold UK£15m In Stock, Alluding To Potential Weakness

In the last year, many RELX PLC (LON:REL) insiders sold a substantial stake in the company which may have sparked shareholders' attention. Knowing whether insiders are buying is usually more helpful when evaluating insider transactions, as insider selling can have various explanations. However, if numerous insiders are selling, shareholders should investigate more.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we would consider it foolish to ignore insider transactions altogether.

View our latest analysis for RELX

RELX Insider Transactions Over The Last Year

The CEO & Executive Director, Erik Engstrom, made the biggest insider sale in the last 12 months. That single transaction was for UK£11m worth of shares at a price of UK£34.02 each. That means that an insider was selling shares at below the current price (UK£34.22). 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. 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. We note that the biggest single sale was only 22% of Erik Engstrom's holding.

Over the last year we saw more insider selling of RELX shares, than buying. 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!

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 RELX Have Bought Stock Recently

It's good to see that RELX insiders have made notable investments in the company's shares. Specifically, Independent Non-Executive Director Alistair Cox bought UK£53k worth of shares in that time, and we didn't record any sales whatsoever. This makes one think the business has some good points.

Insider Ownership Of RELX

Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. RELX insiders own about UK£68m worth of shares. That equates to 0.1% 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 Do The RELX Insider Transactions Indicate?

It's certainly positive to see the recent insider purchase. But we can't say the same for the transactions over the last 12 months. The more recent transactions are a positive, but RELX insiders haven't shown the sustained enthusiasm that we look for, although they do own a decent number of shares, overall. In short they are likely aligned with shareholders. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing RELX. For example - RELX has 1 warning sign we think you should be aware of.

If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, that have HIGH return on equity 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.

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

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.