Rocky Mountain Chocolate Factory Insiders Sold US$812k Of Shares Suggesting Hesitancy

Over the past year, many Rocky Mountain Chocolate Factory, Inc. (NASDAQ:RMCF) insiders sold a significant stake in the company which may have piqued investors' interest. Knowing whether insiders are buying is usually more helpful when evaluating insider transactions, as insider selling can have various explanations. However, shareholders should take a deeper look if several insiders are selling stock over a specific time period.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, logic dictates you should pay some attention to whether insiders are buying or selling shares.

Check out our latest analysis for Rocky Mountain Chocolate Factory

The Last 12 Months Of Insider Transactions At Rocky Mountain Chocolate Factory

The insider, Bradley Radoff, made the biggest insider sale in the last 12 months. That single transaction was for US$777k worth of shares at a price of US$2.70 each. That means that an insider was selling shares at slightly below the current price (US$2.78). As a general rule we consider it to be discouraging when insiders are selling below the current price, because it suggests they were happy with a lower valuation. However, while insider selling is sometimes discouraging, it's only a weak signal. This single sale was 64% of Bradley Radoff's stake.

In the last twelve months insiders purchased 265.55k shares for US$483k. On the other hand they divested 300.41k shares, for US$812k. In total, Rocky Mountain Chocolate Factory insiders sold more than they bought over the last year. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

If you are like me, then you will not want to miss this free list of small cap stocks that are not only being bought by insiders but also have attractive valuations.

Insiders At Rocky Mountain Chocolate Factory Have Sold Stock Recently

There was substantially more insider selling, than buying, of Rocky Mountain Chocolate Factory shares over the last three months. We note insider Bradley Radoff cashed in US$810k worth of shares. On the flip side, Interim CEO & Director Jeffrey Geygan spent US$31k on purchasing shares. Since the selling really does outweigh the buying, we'd say that these transactions may suggest that some insiders feel the shares are not cheap.

Insider Ownership

I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with insiders. We usually like to see fairly high levels of insider ownership. Rocky Mountain Chocolate Factory insiders own about US$3.2m worth of shares. That equates to 15% 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.

What Might The Insider Transactions At Rocky Mountain Chocolate Factory Tell Us?

The insider sales have outweighed the insider buying, at Rocky Mountain Chocolate Factory, in the last three months. Despite some insider buying, the longer term picture doesn't make us feel much more positive. Insiders own shares, but we're still pretty cautious, given the history of sales. We're in no rush to buy! In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Rocky Mountain Chocolate Factory. For instance, we've identified 4 warning signs for Rocky Mountain Chocolate Factory (1 can't be ignored) you should be aware of.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting 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.