We'd be surprised if Scales Corporation Limited (NZSE:SCL) shareholders haven't noticed that the Group Health & Safety, Karen Morrish, recently sold NZ$359k worth of stock at NZ$5.56 per share. In particular, we note that the sale equated to a 100% reduction in their position size, which doesn't exactly instill confidence.
Scales Insider Transactions Over The Last Year
The CEO, MD & Executive Director, Andrew Borland, made the biggest insider sale in the last 12 months. That single transaction was for NZ$1.1m worth of shares at a price of NZ$4.64 each. That means that an insider was selling shares at slightly below the current price (NZ$5.44). As a general rule we consider it to be discouraging when insiders are selling below the current price, because it suggests they were happy with a lower valuation. However, while insider selling is sometimes discouraging, it's only a weak signal. This single sale was just 23% of Andrew Borland's stake.
Over the last year we saw more insider selling of Scales shares, than buying. 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!
For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.
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. It appears that Scales insiders own 4.2% of the company, worth about NZ$33m. 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 Scales Insider Transactions Indicate?
Insiders haven't bought Scales stock in the last three months, but there was some selling. Zooming out, the longer term picture doesn't give us much comfort. On the plus side, Scales makes money, and is growing profits. Insider ownership isn't particularly high, so this analysis makes us cautious about the company. We'd practice some caution before buying! So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. You'd be interested to know, that we found 2 warning signs for Scales and we suggest you have a look.
Of course Scales 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.
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.
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