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 we’ll take a look at whether insiders have been buying or selling shares in RigNet Inc (NASDAQ:RNET).
What Is Insider Selling?
It’s quite normal to see company insiders, such as board members, trading in company stock, from time to time. However, rules govern insider transactions, including certain disclosures.
Insider transactions are not the most important thing when it comes to long-term investing. But logic dictates you should pay some attention to whether insiders are buying or selling shares. For example, a Harvard University study found that ‘insider purchases earn abnormal returns of more than 6% per year.’
The Last 12 Months Of Insider Transactions At RigNet
Over the last year, we can see that the biggest insider sale was by Charles Davis for US$161k worth of shares, at about US$13.73 per share. That means that even when the share price was below the current price of US$16.66, an insider wanted to cash in some shares. Even though it doesn’t necessarily mean anything, that’s certainly not a positive sign, in our book. We generally consider it a negative if insiders have been selling on market, especially if they did so below the current price. Please note, however, that this single sale was just 37.1% of Charles Davis’s stake.
We note that in the last year insiders divested 27.47k shares for a total of US$382k. You can see the insider transactions over the last year depicted in the chart below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).
Insiders at RigNet Have Sold Stock Recently
Over the last three months, we’ve seen significant insider selling at RigNet. In total, insiders sold US$69k worth of shares in that time, and we didn’t record any purchases whatsoever. This may suggest that some insiders think that the shares are not cheap.
Insider Ownership of RigNet
For a common shareholder, it is worth checking how many shares are held by company insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. RigNet insiders own about US$8.7m worth of shares (which is 2.7% of the company). Whilst better than nothing, we’re not overly impressed by these holdings.
What Might The Insider Transactions At RigNet Tell Us?
Insiders sold stock recently, but they haven’t been buying. Furthermore, transactions over the last twelve months dispel the notion that insiders won’t sell readily. When you combine this with the relatively low insider ownership, we are very cautious about the stock. As the saying goes, only fools rush in. If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its future.
Of course RigNet may not be the best stock to buy. So you may wish to see this free collection of high quality companies.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at email@example.com.