Insiders At Softcat Sold UK£825k In Stock, Alluding To Potential Weakness

In the last year, many Softcat plc (LON:SCT) 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, when multiple insiders sell stock over a specific duration, shareholders should take notice as that could possibly be a red flag.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, logic dictates you should pay some attention to whether insiders are buying or selling shares.

View our latest analysis for Softcat

Softcat Insider Transactions Over The Last Year

In the last twelve months, the biggest single sale by an insider was when the CEO & Executive Director, Graham Charlton, sold UK£554k worth of shares at a price of UK£15.83 per share. So it's clear an insider wanted to take some cash off the table, even below the current price of UK£16.49. 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. Please do note, however, that sellers may have a variety of reasons for selling, so we don't know for sure what they think of the stock price. This single sale was just 23% of Graham Charlton's stake.

In the last year Softcat insiders didn't buy any company stock. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

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Softcat Insiders Are Selling The Stock

The last three months saw significant insider selling at Softcat. Specifically, Non-Executive Chairman Graeme Watt ditched UK£271k worth of shares in that time, and we didn't record any purchases whatsoever. In light of this it's hard to argue that all the insiders think that the shares are a bargain.

Does Softcat Boast High Insider Ownership?

For a common shareholder, it is worth checking how many shares are held by company insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. Softcat insiders own about UK£1.1b worth of shares (which is 33% of the company). I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.

So What Does This Data Suggest About Softcat Insiders?

An insider hasn't bought Softcat stock in the last three months, but there was some selling. Looking to the last twelve months, our data doesn't show any insider buying. But since Softcat is profitable and growing, we're not too worried by this. While insiders do own a lot of shares in the company (which is good), our analysis of their transactions doesn't make us feel confident about the company. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Softcat. To assist with this, we've discovered 2 warning signs that you should run your eye over to get a better picture of Softcat.

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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.