Possible Bearish Signals With RIT Capital Partners Insiders Disposing Stock

The fact that multiple RIT Capital Partners Plc (LON:RCP) 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 insider transactions are not the most important thing when it comes to long-term investing, we do think it is perfectly logical to keep tabs on what insiders are doing.

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RIT Capital Partners Insider Transactions Over The Last Year

In the last twelve months, the biggest single sale by an insider was when the Non-Independent Non-Executive Director, Dame Rothschild, sold UK£3.4m worth of shares at a price of UK£18.70 per share. That means that an insider was selling shares at slightly below the current price (UK£19.26). When an insider sells below the current price, it suggests that they considered that lower price to be fair. That makes us wonder what they think of the (higher) recent 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 1.3% of Dame Rothschild's holding.

Happily, we note that in the last year insiders paid UK£1.6m for 83.13k shares. On the other hand they divested 260.07k shares, for UK£4.8m. Over the last year we saw more insider selling of RIT Capital Partners 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!

View our latest analysis for RIT Capital Partners

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Insiders At RIT Capital Partners Have Bought Stock Recently

Over the last three months, we've seen significant insider buying at RIT Capital Partners. Specifically, Independent Non-Executive Director Vikas Karlekar bought UK£60k worth of shares in that time, and we didn't record any sales whatsoever. This is a positive in our book as it implies some confidence.

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. RIT Capital Partners insiders own about UK£8.4m worth of shares. That equates to 0.3% 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.

What Might The Insider Transactions At RIT Capital Partners Tell Us?

It's certainly positive to see the recent insider purchase. On the other hand the transaction history, over the last year, isn't so positive. We're not thrilled with the relatively low insider ownership and the longer term transaction history. But we like the recent purchasing. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. Case in point: We've spotted 1 warning sign for RIT Capital Partners you should be aware of.

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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.