Reading International Repeat Insider Selling Not A Positive Indicator

Reading International, Inc. (NASDAQ:RDI) shareholders might have a reason to worry after multiple insiders sold their shares over the last year. 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, we do think it is perfectly logical to keep tabs on what insiders are doing.

See our latest analysis for Reading International

The Last 12 Months Of Insider Transactions At Reading International

Over the last year, we can see that the biggest insider sale was by the Lead Independent Director, Douglas McEachern, for US$64k worth of shares, at about US$1.29 per share. That means that an insider was selling shares at slightly below the current price (US$1.45). We generally consider it a negative if insiders have been selling, especially if they did so below the current price, because it implies that they considered a lower price to be reasonable. However, while insider selling is sometimes discouraging, it's only a weak signal. This single sale was 65% of Douglas McEachern's stake. Notably Douglas McEachern was also the biggest buyer, having purchased US$73k worth of shares.

All up, insiders sold more shares in Reading International than they bought, over the last year. The chart below shows insider transactions (by companies and individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!

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Reading International Insiders Bought Stock Recently

Over the last three months, we've seen significantly more insider buying, than insider selling, at Reading International. Lead Independent Director Douglas McEachern spent US$73k on stock. On the other hand, insider Steven Lucas netted US$18k by selling. We think insiders may be optimistic about the future, since insiders have been net buyers of shares.

Insider Ownership

Many investors like to check how much of a company is owned by insiders. We usually like to see fairly high levels of insider ownership. Our data indicates that Reading International insiders own about US$5.8m worth of shares (which is 14% of the company). But they may have an indirect interest through a corporate structure that we haven't picked up on. We do generally prefer see higher levels of insider ownership.

What Might The Insider Transactions At Reading International Tell Us?

It's certainly positive to see the recent insider purchase. On the other hand the transaction history, over the last year, isn't so positive. The transactions over the last year don't give us confidence, and nor does the fairly low insider ownership, but at least the recent buying is a positive. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. To help with this, we've discovered 4 warning signs (1 is significant!) that you ought to be aware of before buying any shares in Reading International.

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.