Stock Analysis

Don't Ignore The Fact That This Insider Just Sold Some Shares In Pacific Edge Limited (NZSE:PEB)

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NZSE:PEB
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We note that a Pacific Edge Limited (NZSE:PEB) insider, Eli Darling, recently sold NZ$120k worth of stock for NZ$1.05 per share. It wasn't a huge sale, but it did reduce their holding by 33%. This does not instill confidence.

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The Last 12 Months Of Insider Transactions At Pacific Edge

In fact, the recent sale by insider Eli Darling was not their only sale of Pacific Edge shares this year. Earlier in the year, they fetched NZ$0.74 per share in a -NZ$258k sale. So it's clear an insider wanted to take some cash off the table, even below the current price of NZ$1.02. 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. 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. We note that the biggest single sale was only 50%of Eli Darling's holding.

Eli Darling sold a total of 464.08k shares over the year at an average price of NZ$0.82. 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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NZSE:PEB Insider Trading Volume March 21st 2021

I will like Pacific Edge better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.

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. Insiders own 8.1% of Pacific Edge shares, worth about NZ$60m. We've certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.

So What Do The Pacific Edge Insider Transactions Indicate?

The insider sales have outweighed the insider buying, at Pacific Edge, in the last three months. Despite some insider buying, the longer term picture doesn't make us feel much more positive. 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. While conducting our analysis, we found that Pacific Edge has 3 warning signs and it would be unwise to ignore them.

Of course Pacific Edge 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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