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We often see insiders buying up shares in companies that perform well over the long term. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So before you buy or sell Ready Capital Corporation (NYSE:RC), you may well want to know whether insiders have been buying or selling.
What Is Insider Buying?
Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock on the market. However, such insiders must disclose their trading activities, and not trade on inside information.
Insider transactions are not the most important thing when it comes to long-term investing. But it is perfectly logical to keep tabs on what insiders are doing. For example, a Harvard University study found that ‘insider purchases earn abnormal returns of more than 6% per year.’
Ready Capital Insider Transactions Over The Last Year
Chairman & CEO Thomas Capasse made the biggest insider purchase in the last 12 months. That single transaction was for US$294k worth of shares at a price of US$14.86 each. That means that an insider was happy to buy shares at around the current price of US$15.17. Of course they may have changed their mind. But this suggests they are optimistic. If someone buys shares at well below current prices, it’s a good sign on balance, but keep in mind they may no longer see value. The good news for Ready Capital share holders is that insiders were buying at near the current price.
Happily, we note that in the last year insiders paid US$345k for 23500 shares. But they sold 6000 for US$88k. In the last twelve months there was more buying than selling by Ready Capital insiders. The chart below shows insider transactions (by 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!
Ready Capital Insiders Are Selling The Stock
Over the last three months, we’ve seen a bit of insider selling at Ready Capital. US$88k worth of shares were sold by Todd Sinai. But at least we saw US$52k worth of buying. While it’s not great to see insider selling, the net amount sold isn’t enough for us to want to read anything into it.
Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. We usually like to see fairly high levels of insider ownership. Ready Capital insiders own about US$11m worth of shares. That equates to 1.6% of the company. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.
So What Do The Ready Capital Insider Transactions Indicate?
We note that there’s been a little more insider selling than buying, recently. But the net divestment is not enough to concern us at all. However, our analysis of transactions over the last year is heartening. Overall we don’t see anything to make us think Ready Capital insiders are doubting the company, and they do own shares. Therefore, you should should definitely take a look at this FREE report showing analyst forecasts for Ready Capital.
But note: Ready Capital may not be the best stock to buy. So take a peek at this free list of interesting companies with high ROE and low debt.
For the purposes of this article, insiders are those individuals who report their transactions to the relevant regulatory body.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.