Stock Analysis

Have Insiders Been Selling Redcentric plc (LON:RCN) Shares This Year?

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AIM:RCN
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We often see insiders buying up shares in companies that perform well over the long term. The flip side of that is that there are more than a few examples of insiders dumping stock prior to a period of weak performance. So shareholders might well want to know whether insiders have been buying or selling shares in Redcentric plc (LON:RCN).

Do Insider Transactions Matter?

Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock in the company. However, most countries require that the company discloses such transactions to the market.

Insider transactions are not the most important thing when it comes to long-term investing. But equally, we would consider it foolish to ignore insider transactions altogether. For example, a Harvard University study found that 'insider purchases earn abnormal returns of more than 6% per year'.

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Redcentric Insider Transactions Over The Last Year

In the last twelve months, the biggest single sale by an insider was when the insider, Richard Griffiths, sold UK£117k worth of shares at a price of UK£1.45 per share. That means that an insider was selling shares at around the current price of UK£1.25. We generally don't like to see insider selling, but the lower the sale price, the more it concerns us. 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. Richard Griffiths was the only individual insider to sell shares in the last twelve months.

Richard Griffiths ditched 121.13k shares over the year. The average price per share was UK£1.45. The chart below shows insider transactions (by companies and individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!

insider-trading-volume
AIM:RCN Insider Trading Volume December 14th 2020

If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.

Does Redcentric Boast High 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. I reckon it's a good sign if insiders own a significant number of shares in the company. Insiders own 14% of Redcentric shares, worth about UK£27m. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.

So What Do The Redcentric Insider Transactions Indicate?

There haven't been any insider transactions in the last three months -- that doesn't mean much. Still, the insider transactions at Redcentric in the last 12 months are not very heartening. But it's good to see that insiders own shares in the company. While we like knowing what's going on with the insider's ownership and transactions, we make sure to also consider what risks are facing a stock before making any investment decision. While conducting our analysis, we found that Redcentric has 3 warning signs and it would be unwise to ignore them.

Of course Redcentric 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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