Have Discovery Insiders Been Selling Stock?

We wouldn't blame Discovery Limited (JSE:DSY) shareholders if they were a little worried about the fact that Neville Koopowitz, the CEO of Vitality UK recently netted about R13m selling shares at an average price of R172. However, it's crucial to note that they remain very much invested in the stock and that sale only reduced their holding by 9.7%.

View our latest analysis for Discovery

Discovery Insider Transactions Over The Last Year

Over the last year, we can see that the biggest insider sale was by the Founder, Adrian Gore, for R29m worth of shares, at about R118 per share. That means that an insider was selling shares at slightly below the current price (R175). 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. While insider selling is not a positive sign, we can't be sure if it does mean insiders think the shares are fully valued, so it's only a weak sign. It is worth noting that this sale was only 0.3% of Adrian Gore's holding.

Insiders in Discovery didn't buy any shares in the last year. 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 Discovery 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.

Does Discovery Boast High 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. It's great to see that Discovery insiders own 17% of the company, worth about R20b. Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.

So What Do The Discovery Insider Transactions Indicate?

Insiders sold stock recently, but they haven't been buying. And even if we look at the last year, we didn't see any purchases. But it is good to see that Discovery is growing earnings. The company boasts high insider ownership, but we're a little hesitant, given the history of share sales. So while it's helpful to know what insiders are doing in terms of buying or selling, it's also helpful to know the risks that a particular company is facing. While conducting our analysis, we found that Discovery has 1 warning sign and it would be unwise to ignore this.

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.