FirstRand Insider Lowered Holding By 100% During Last Year

Insiders were net sellers of FirstRand Limited's (JSE:FSR ) stock during the past year. That is, insiders sold more stock than they bought.

Although we don't think shareholders should simply follow insider transactions, logic dictates you should pay some attention to whether insiders are buying or selling shares.

See our latest analysis for FirstRand

The Last 12 Months Of Insider Transactions At FirstRand

The Independent Non-Executive Chairman, Johan Burger, made the biggest insider sale in the last 12 months. That single transaction was for R59m worth of shares at a price of R65.82 each. That means that an insider was selling shares at slightly below the current price (R82.52). 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 100% of Johan Burger's stake. The only individual insider seller over the last year was Johan Burger.

Happily, we note that in the last year insiders paid R14m for 213.57k shares. But insiders sold 900.00k shares worth R59m. The chart below shows insider transactions (by companies and individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

I will like FirstRand better if I see some big insider buys. While we wait, check out this free list of undervalued and small cap stocks with considerable, recent, insider buying.

Insider Ownership

Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. We usually like to see fairly high levels of insider ownership. Insiders own 0.4% of FirstRand shares, worth about R1.6b. While this is a strong but not outstanding level of insider ownership, it's enough to indicate some alignment between management and smaller shareholders.

What Might The Insider Transactions At FirstRand Tell Us?

The fact that there have been no FirstRand insider transactions recently certainly doesn't bother us. While we feel good about high insider ownership of FirstRand, we can't say the same about the selling of shares. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing FirstRand. While conducting our analysis, we found that FirstRand has 1 warning sign and it would be unwise to ignore it.

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.

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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.