Should You Take Comfort From Insider Transactions At ReadyTech Holdings Limited (ASX:RDY)?

Simply Wall St
·3 min read

It is not uncommon to see companies perform well in the years after insiders buy shares. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So shareholders might well want to know whether insiders have been buying or selling shares in ReadyTech Holdings Limited (ASX:RDY).

What Is Insider Selling?

It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, most countries require that the company discloses such transactions to the market.

We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. But logic dictates you should pay some attention to whether insiders are buying or selling shares. For example, a Columbia University study found that 'insiders are more likely to engage in open market purchases of their own company’s stock when the firm is about to reveal new agreements with customers and suppliers'.

View our latest analysis for ReadyTech Holdings

ReadyTech Holdings Insider Transactions Over The Last Year

The Alternate Non-Executive Director Mark Summerhayes made the biggest insider purchase in the last 12 months. That single transaction was for AU$208k worth of shares at a price of AU$1.80 each. We do like to see buying, but this purchase was made at well below the current price of AU$2.10. Because the shares were purchased at a lower price, this particular buy doesn't tell us much about how insiders feel about the current share price.

While ReadyTech Holdings insiders bought shares during the last year, they didn't sell. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

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insider-trading-volume

ReadyTech Holdings is not the only stock that insiders are buying. For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

ReadyTech Holdings Insiders Bought Stock Recently

It's good to see that ReadyTech Holdings insiders have made notable investments in the company's shares. In total, insiders bought AU$219k worth of shares in that time, and we didn't record any sales whatsoever. This makes one think the business has some good points.

Does ReadyTech Holdings Boast High Insider Ownership?

Many investors like to check how much of a company is owned by insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. It appears that ReadyTech Holdings insiders own 8.9% of the company, worth about AU$19m. We've certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.

So What Does This Data Suggest About ReadyTech Holdings Insiders?

It's certainly positive to see the recent insider purchases. And the longer term insider transactions also give us confidence. Given that insiders also own a fair bit of ReadyTech Holdings we think they are probably pretty confident of a bright future. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing ReadyTech Holdings. For example - ReadyTech Holdings has 1 warning sign we think you should be aware of.

Of course ReadyTech Holdings may not be the best stock to buy. So you may wish to see this free collection of high quality 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, but not derivative transactions.

This article by Simply Wall St is general in nature. 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.

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