Insiders Could Have Profited By Holding onto Santova Shares Despite 10% Drop

Santova Limited's (JSE:SNV) stock price has dropped 10% in the previous week, but insiders who sold R10m in stock over the past year have had less luck. Insiders might have been better off holding onto their shares, given that the average selling price of R8.66 is still below the current share price.

While insider transactions are not the most important thing when it comes to long-term investing, we do think it is perfectly logical to keep tabs on what insiders are doing.

Check out our latest analysis for Santova

Santova Insider Transactions Over The Last Year

The Executive Director, Anthony van Zyl, made the biggest insider sale in the last 12 months. That single transaction was for R4.3m worth of shares at a price of R9.50 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 R6.80. So it may not shed much light on insider confidence at current levels. Notably Anthony van Zyl was also the biggest buyer, having purchased R1.6m worth of shares.

Happily, we note that in the last year insiders paid R1.6m for 170.73k shares. But they sold 1.20m shares for R10m. In total, Santova insiders sold more than they bought over 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!

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Insiders At Santova Have Sold Stock Recently

Over the last three months, we've seen significant insider selling at Santova. In total, insiders sold 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

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. Insiders own 25% of Santova shares, worth about R220m. While this is a strong but not outstanding level of insider ownership, it's enough to indicate some alignment between management and smaller shareholders.

So What Does This Data Suggest About Santova Insiders?

Insiders sold stock recently, but they haven't been buying. Zooming out, the longer term picture doesn't give us much comfort. The company boasts high insider ownership, but we're a little hesitant, given the history of share sales. 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. While conducting our analysis, we found that Santova has 2 warning signs and it would be unwise to ignore them.

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.