Have EROAD Insiders Been Selling Stock?

Anyone interested in EROAD Limited (NZSE:ERD) should probably be aware that a company insider, David Kenneson, recently divested NZ$488k worth of shares in the company, at an average price of NZ$1.32 each. In particular, we note that the sale equated to a 100% reduction in their position size, which doesn't exactly instill confidence.

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EROAD Insider Transactions Over The Last Year

Over the last year, we can see that the biggest insider sale was by the insider, Selwyn Pellett, for NZ$2.1m worth of shares, at about NZ$1.05 per share. That means that an insider was selling shares at slightly below the current price (NZ$1.18). 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. It is worth noting that this sale was 54% of Selwyn Pellett's holding.

In total, EROAD insiders sold more than they bought over the last year. The chart below shows insider transactions (by companies and individuals) over the last year. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

Check out our latest analysis for EROAD

If you like to buy stocks that insiders are buying, rather than selling, then you might just love this free list of companies. (Hint: Most of them are flying under the radar).

Does EROAD Boast High Insider Ownership?

Many investors like to check how much of a company is owned by insiders. I reckon it's a good sign if insiders own a significant number of shares in the company. From our data, it seems that EROAD insiders own 6.3% of the company, worth about NZ$14m. However, it's possible that insiders might have an indirect interest through a more complex structure. We do generally prefer see higher levels of insider ownership.

So What Do The EROAD Insider Transactions Indicate?

An insider sold stock recently, but they haven't been buying. 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! In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing EROAD. Our analysis shows 2 warning signs for EROAD (1 is potentially serious!) and we strongly recommend you look at these before investing.

If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, that have HIGH return on equity and low debt.

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.