Possible Bearish Signals With iFAST Insiders Disposing Stock

In the last year, many iFAST Corporation Ltd. (SGX:AIY) insiders sold a substantial stake in the company which may have sparked shareholders' attention. When analyzing insider transactions, it is usually more valuable to know whether insiders are buying versus knowing if they are selling, as the latter sends an ambiguous message. However, when multiple insiders sell stock over a specific duration, shareholders should take notice as that could possibly be a red flag.

Although we don't think shareholders should simply follow insider transactions, we do think it is perfectly logical to keep tabs on what insiders are doing.

This technology could replace computers: discover the 20 stocks are working to make quantum computing a reality.

The Last 12 Months Of Insider Transactions At iFAST

Over the last year, we can see that the biggest insider sale was by the Non-Independent Non-Executive Director, Wee Kian Lim, for S$664k worth of shares, at about S$9.51 per share. So what is clear is that an insider saw fit to sell at around the current price of S$8.70. While insider selling is a negative, to us, it is more negative if the shares are sold at a lower price. In this case, the big sale took place at around the current price, so it's not too bad (but it's still not a positive). Notably Wee Kian Lim was also the biggest buyer, having purchased S$1.0m worth of shares.

Happily, we note that in the last year insiders paid S$1.0m for 140.00k shares. On the other hand they divested 176.00k shares, for S$1.6m. All up, insiders sold more shares in iFAST than they bought, over the last year. They sold for an average price of about S$9.25. It's not particularly great to see insiders were selling shares at below recent prices. Since insiders sell for many reasons, we wouldn't put too much weight on it. 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!

Check out our latest analysis for iFAST

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).

iFAST Insiders Are Selling The Stock

Over the last three months, we've seen notably more insider selling, than insider buying, at iFAST. In that time, Non-Independent Non-Executive Director Wee Kian Lim dumped S$1.3m worth of shares. On the flip side, Group CEO & Executive Chairman Chung Chun Lim spent S$497k on purchasing shares. Because the selling vastly outweighs the buying, we'd say this is a somewhat bearish sign.

Insider Ownership Of iFAST

Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. I reckon it's a good sign if insiders own a significant number of shares in the company. iFAST insiders own 28% of the company, currently worth about S$749m based on the recent share price. Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.

So What Do The iFAST Insider Transactions Indicate?

The stark truth for iFAST is that there has been more insider selling than insider buying in the last three months. Zooming out, the longer term picture doesn't give us much comfort. On the plus side, iFAST makes money, and is growing profits. 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. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. In terms of investment risks, we've identified 1 warning sign with iFAST and understanding it should be part of your investment process.

Of course iFAST 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 of direct interests only, but not derivative transactions or indirect interests.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.