Numerous RCI Hospitality Holdings Insiders Sold Stock: Not A Positive Omen

RCI Hospitality Holdings, Inc. (NASDAQ:RICK) shareholders might have a reason to worry after multiple insiders sold their shares over the last year. 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.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we do think it is perfectly logical to keep tabs on what insiders are doing.

Our free stock report includes 3 warning signs investors should be aware of before investing in RCI Hospitality Holdings. Read for free now.

RCI Hospitality Holdings Insider Transactions Over The Last Year

Over the last year, we can see that the biggest insider sale was by the Chief Financial Officer, Bradley Chhay, for US$81k worth of shares, at about US$44.63 per share. That means that an insider was selling shares at below the current price (US$44.99). When an insider sells below the current price, it suggests that they considered that lower price to be fair. That makes us wonder what they think of the (higher) recent 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. This single sale was just 34% of Bradley Chhay's stake.

Happily, we note that in the last year insiders paid US$133k for 2.82k shares. But they sold 5.61k shares for US$244k. Over the last year we saw more insider selling of RCI Hospitality Holdings shares, than buying. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. By clicking on the graph below, you can see the precise details of each insider transaction!

View our latest analysis for RCI Hospitality Holdings

I will like RCI Hospitality Holdings better if I see some big insider buys. While we wait, check out this free list of undervalued and small cap stocks with considerable, recent, insider buying.

RCI Hospitality Holdings Insiders Bought Stock Recently

Over the last three months, we've seen a bit of insider buying at RCI Hospitality Holdings. Independent Director Elaine Martin bought US$17k worth of shares in that time. It's great to see that insiders are only buying, not selling. But in this case the amount purchased means the recent transaction may not be very meaningful on its own.

Does RCI Hospitality Holdings Boast High Insider Ownership?

Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. We usually like to see fairly high levels of insider ownership. It appears that RCI Hospitality Holdings insiders own 8.4% of the company, worth about US$32m. 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 RCI Hospitality Holdings Insider Transactions Indicate?

Insider purchases may have been minimal, in the last three months, but there was no selling at all. That said, the purchases were not large. Our analysis of RCI Hospitality Holdings insider transactions leaves us cautious. But it's good to see that insiders own shares in 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. You'd be interested to know, that we found 3 warning signs for RCI Hospitality Holdings and we suggest you have a look.

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.