Redrow plc (LON:RDW) insiders sold UK£2.2m worth of stock suggesting impending weakness.

By
Simply Wall St
Published
January 10, 2022
LSE:RDW
Source: Shutterstock

Over the past year, many Redrow plc (LON:RDW) insiders sold a significant stake in the company which may have piqued investors' interest. Knowing whether insiders are buying is usually more helpful when evaluating insider transactions, as insider selling can have various explanations. However, shareholders should take a deeper look if several insiders are selling stock over a specific time period.

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.

See our latest analysis for Redrow

The Last 12 Months Of Insider Transactions At Redrow

In the last twelve months, the biggest single sale by an insider was when the insider, John Tutte, sold UK£2.2m worth of shares at a price of UK£5.54 per share. That means that even when the share price was below the current price of UK£6.86, an insider wanted to cash in some shares. 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 only 25% of John Tutte's holding.

In the last year Redrow insiders didn't buy any company stock. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. By clicking on the graph below, you can see the precise details of each insider transaction!

insider-trading-volume
LSE:RDW Insider Trading Volume January 10th 2022

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).

Insider Ownership

For a common shareholder, it is worth checking how many shares are held by company insiders. We usually like to see fairly high levels of insider ownership. Our data indicates that Redrow insiders own about UK£4.7m worth of shares (which is 0.2% of the company). Overall, this level of ownership isn't that impressive, but it's certainly better than nothing!

What Might The Insider Transactions At Redrow Tell Us?

It doesn't really mean much that no insider has traded Redrow shares in the last quarter. We don't take much encouragement from the transactions by Redrow insiders. We also note that, as far as we can see, insider ownership is fairly low, compared to other companies. 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 - Redrow has 1 warning sign we think you should be aware of.

Of course Redrow 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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