One RH (NYSE:RH) insider reduced their stake by 22% in the previous year

By
Simply Wall St
Published
April 13, 2022
NYSE:RH
Source: Shutterstock

Viewing insider transactions for RH's (NYSE:RH ) over the last year, we see that insiders were net sellers. This means that a larger number of shares were sold by insiders in relation to shares purchased.

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 RH

RH Insider Transactions Over The Last Year

Notably, that recent sale by Gary Friedman is the biggest insider sale of RH shares that we've seen in the last year. That means that an insider was selling shares at slightly below the current price (US$347). 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 just 22% of Gary Friedman's stake.

You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. By clicking on the graph below, you can see the precise details of each insider transaction!

insider-trading-volume
NYSE:RH Insider Trading Volume April 13th 2022

If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.

RH Insiders Are Selling The Stock

The last three months saw significant insider selling at RH. In total, Chairman & CEO Gary Friedman sold US$273m worth of shares in that time, and we didn't record any purchases whatsoever. Overall this makes us a bit cautious, but it's not the be all and end all.

Insider Ownership of RH

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. A high insider ownership often makes company leadership more mindful of shareholder interests. RH insiders own about US$1.1b worth of shares (which is 13% of the company). This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.

So What Does This Data Suggest About RH Insiders?

An insider sold RH shares recently, but they didn't buy any. Looking to the last twelve months, our data doesn't show any insider buying. On the plus side, RH makes money, and is growing profits. While insiders do own a lot of shares in the company (which is good), our analysis of their transactions doesn't make us feel confident about the company. While we like knowing 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. You'd be interested to know, that we found 3 warning signs for RH and we suggest you have a look.

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, but not derivative transactions.

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