NVest Financial Holdings Limited (JSE:NVE) insiders sold R16m worth of stock last year which shareholders may not want to overlook

By
Simply Wall St
Published
October 21, 2021
Source: Shutterstock

While it’s been a great week for NVest Financial Holdings Limited (JSE:NVE) shareholders after stock gained 14%, they should consider it with a grain of salt. The fact that insiders chose to dispose of R16m worth of stock in the past 12 months even though prices were relatively low could be indicative of some anticipated weakness.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we would consider it foolish to ignore insider transactions altogether.

View our latest analysis for NVest Financial Holdings

NVest Financial Holdings Insider Transactions Over The Last Year

The COO, Compliance Officer & Executive Director, Brendan Connellan, made the biggest insider sale in the last 12 months. That single transaction was for R8.6m worth of shares at a price of R2.10 each. So it's clear an insider wanted to take some cash off the table, even below the current price of R2.40. 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. Please do note, however, that sellers may have a variety of reasons for selling, so we don't know for sure what they think of the stock price. It is worth noting that this sale was only 38% of Brendan Connellan's holding.

In the last twelve months insiders purchased 185.21k shares for R388k. But insiders sold 7.82m shares worth R16m. Over the last year we saw more insider selling of NVest Financial Holdings shares, than buying. 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!

insider-trading-volume
JSE:NVE Insider Trading Volume October 22nd 2021

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

Have NVest Financial Holdings Insiders Traded Recently?

We have seen a bit of insider selling at NVest Financial Holdings, over the last three months. insider Basil Russell sold just R105k worth of shares in that time. Neither the lack of buying nor the presence of selling is heartening. But the amount sold isn't enough for us to put any weight on it.

Insider Ownership of NVest Financial Holdings

For a common shareholder, it is worth checking how many shares are held by company insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. NVest Financial Holdings insiders own about R307m worth of shares (which is 52% 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 NVest Financial Holdings Insiders?

An insider hasn't bought NVest Financial Holdings stock in the last three months, but there was some selling. And our longer term analysis of insider transactions didn't bring confidence, either. It is good to see high insider ownership, but the insider selling leaves us cautious. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing NVest Financial Holdings. In terms of investment risks, we've identified 2 warning signs with NVest Financial Holdings and understanding these should be part of your investment process.

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, but not derivative transactions.

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