Insiders Who Purchased US$654.7m Of RDE Stock May Not Have Expected 33% Tumble

The recent 33% drop in RDE, Inc.'s (NASDAQ:GIFT) stock could come as a blow to insiders who purchased US$654.7m worth of stock at an average buy price of US$25,552 over the past 12 months. This is not good as insiders invest based on expectations that their money will appreciate over time. However, as a result of recent losses, their original investment is now worth only US$34.6k.

Although we don't think shareholders should simply follow insider transactions, we would consider it foolish to ignore insider transactions altogether.

View our latest analysis for RDE

RDE Insider Transactions Over The Last Year

Notably, that recent purchase by Steve Handy is the biggest insider purchase of RDE shares that we've seen in the last year. So it's clear an insider wanted to buy, even at a higher price than the current share price (being US$1.35). Their view may have changed since then, but at least it shows they felt optimistic at the time. In our view, the price an insider pays for shares is very important. Generally speaking, it catches our eye when an insider has purchased shares at above current prices, as it suggests they believed the shares were worth buying, even at a higher price. Steve Handy was the only individual insider to buy shares in the last twelve months.

Steve Handy bought 25.62k shares over the last 12 months at an average price of US$25,552. The chart below shows insider transactions (by companies and 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!

RDE is not the only stock insiders are buying. So take a peek at this free list of under-the-radar companies with insider buying.

Does RDE Boast High 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. I reckon it's a good sign if insiders own a significant number of shares in the company. It appears that RDE insiders own 21% of the company, worth about US$9.1m. 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 Does This Data Suggest About RDE Insiders?

It is good to see the recent insider purchase. 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. Given that insiders also own a fair bit of RDE we think they are probably pretty confident of a bright future. While it's good to be aware of what's going on with the insider's ownership and transactions, we make sure to also consider what risks are facing a stock before making any investment decision. Be aware that RDE is showing 4 warning signs in our investment analysis, and 2 of those are a bit unpleasant...

Of course RDE may not be the best stock to buy. So you may wish to see this free collection of high quality 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.

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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.