Resources Connection Up 13%, Insiders Still Down After US$560.6k Purchase

Some of the losses seen by insiders who purchased US$560.6k worth of Resources Connection, Inc. (NASDAQ:RGP) shares over the past year were recovered after the stock increased by 13% over the past week. The purchase, however, has proven to be a pricey bet, with losses currently totalling US$87k.

Although we don't think shareholders should simply follow insider transactions, logic dictates you should pay some attention to whether insiders are buying or selling shares.

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Resources Connection Insider Transactions Over The Last Year

In the last twelve months, the biggest single purchase by an insider was when Independent Director Roger Carlile bought US$281k worth of shares at a price of US$11.25 per share. So it's clear an insider wanted to buy, even at a higher price than the current share price (being US$5.93). Their view may have changed since then, but at least it shows they felt optimistic at the time. We always take careful note of the price insiders pay when purchasing shares. As a general rule, we feel more positive about a stock if insiders have bought shares at above current prices, because that suggests they viewed the stock as good value, even at a higher price.

Happily, we note that in the last year insiders paid US$561k for 79.90k shares. But they sold 16.85k shares for US$158k. Overall, Resources Connection insiders were net buyers during the last year. The average buy price was around US$7.02. These transactions suggest that insiders have considered the current price attractive. The chart below shows insider transactions (by companies and individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

View our latest analysis for Resources Connection

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Resources Connection Insiders Bought Stock Recently

There has been significantly more insider buying, than selling, at Resources Connection, over the last three months. In total, three insiders bought US$279k worth of shares in that time. But Lead Independent Director David White sold shares worth US$27k. We think insiders may be optimistic about the future, since insiders have been net buyers of shares.

Insider Ownership

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. Insiders own 3.4% of Resources Connection shares, worth about US$6.7m, according to our data. Whilst better than nothing, we're not overly impressed by these holdings.

So What Do The Resources Connection Insider Transactions Indicate?

It is good to see recent purchasing. And an analysis of the transactions over the last year also gives us confidence. However, we note that the company didn't make a profit over the last twelve months, which makes us cautious. On this analysis the only slight negative we see is the fairly low (overall) insider ownership; their transactions suggest that they are quite positive on Resources Connection stock. 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 Resources Connection and understanding it should be part of your investment process.

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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.