Insiders Sold Vunani Prematurely At R2.55 With Stock Trading Higher

Despite the fact that Vunani Limited's (JSE:VUN) value has dropped 25% in the last week insiders who sold R6.3m worth of stock in the past 12 months have had less success. Insiders might have been better off holding onto their shares, given that the average selling price of R2.55 is still below the current share price.

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 Vunani

Vunani Insider Transactions Over The Last Year

The Non-Executive Director, Sithembiso Mthethwa, made the biggest insider sale in the last 12 months. That single transaction was for R2.5m worth of shares at a price of R2.50 each. While insider selling is a negative, to us, it is more negative if the shares are sold at a lower price. It's of some comfort that this sale was conducted at a price well above the current share price, which is R2.00. So it may not tell us anything about how insiders feel about the current share price.

Happily, we note that in the last year insiders paid R300k for 107.00k shares. On the other hand they divested 2.45m shares, for R6.3m. All up, insiders sold more shares in Vunani than they bought, over the last year. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

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

Vunani Insiders Are Selling The Stock

The last three months saw significant insider selling at Vunani. In total, insiders dumped R1.3m 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 Vunani

Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Vunani insiders own about R65m worth of shares. That equates to 20% of the company. We've certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.

What Might The Insider Transactions At Vunani Tell Us?

Insiders sold Vunani shares recently, but they didn't buy any. And our longer term analysis of insider transactions didn't bring confidence, either. Insiders own shares, but we're still pretty cautious, given the history of sales. We're in no rush to buy! In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Vunani. Our analysis shows 7 warning signs for Vunani (2 don't sit too well with us!) and we strongly recommend you look at them before investing.

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.