Possible Bearish Signals With Paragon Banking Group Insiders Disposing Stock

In the last year, many Paragon Banking Group PLC (LON:PAG) insiders sold a substantial stake in the company which may have sparked shareholders' attention. 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, if numerous insiders are selling, shareholders should investigate more.

While insider transactions are not the most important thing when it comes to long-term investing, logic dictates you should pay some attention to whether insiders are buying or selling shares.

See our latest analysis for Paragon Banking Group

The Last 12 Months Of Insider Transactions At Paragon Banking Group

In the last twelve months, the biggest single sale by an insider was when the Chief Executive & Director, Nigel Terrington, sold UK£414k worth of shares at a price of UK£7.06 per share. That means that an insider was selling shares at around the current price of UK£7.00. While we don't usually like to see insider selling, it's more concerning if the sales take place 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. Notably Nigel Terrington was also the biggest buyer, having purchased UK£576k worth of shares.

Happily, we note that in the last year insiders paid UK£576k for 97.98k shares. But they sold 108.72k shares for UK£773k. In total, Paragon Banking Group insiders sold more than they bought over the last year. The average sell price was around UK£7.11. We don't gain confidence from insider selling below the recent share price. Since insiders sell for many reasons, we wouldn't put too much weight on it. 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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Insiders At Paragon Banking Group Have Sold Stock Recently

Over the last three months, we've seen notably more insider selling, than insider buying, at Paragon Banking Group. We note Non-Executive Director Hugo Tudor cashed in UK£98k worth of shares. Meanwhile insiders bought UK£41k worth. We don't view these transactions as a positive sign.

Insider Ownership Of Paragon Banking Group

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. It appears that Paragon Banking Group insiders own 5.2% of the company, worth about UK£74m. 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 Does This Data Suggest About Paragon Banking Group Insiders?

The stark truth for Paragon Banking Group is that there has been more insider selling than insider buying in the last three months. Zooming out, the longer term picture doesn't give us much comfort. Insiders own shares, but we're still pretty cautious, given the history of sales. So we'd only buy after careful consideration. So while it's helpful to know what insiders are doing in terms of buying or selling, it's also helpful to know the risks that a particular company is facing. While conducting our analysis, we found that Paragon Banking Group has 2 warning signs and it would be unwise to ignore them.

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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.