We often see insiders buying up shares in companies that perform well over the long term. 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 Registry Direct Limited (ASX:RD1).

What Is Insider Selling?

Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock on the market. However, most countries require that the company discloses such transactions to the market.

We don't think shareholders should simply follow insider transactions. But equally, we would consider it foolish to ignore insider transactions altogether. 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 Registry Direct

The Last 12 Months Of Insider Transactions At Registry Direct

The Chairman, Donald McLay, made the biggest insider sale in the last 12 months. That single transaction was for AU$105k worth of shares at a price of AU$0.03 each. That means that even when the share price was below the current price of AU$0.04, an insider wanted to cash in some shares. 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. 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. We note that the biggest single sale was only 11.6% of Donald McLay's holding. Donald McLay was the only individual insider to sell over the last year. Notably Donald McLay was also the biggest buyer, having purchased AU$30k worth of shares.

You can see the insider transactions (by individuals) over the last year depicted in the chart below. 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 Registry Direct Have Bought Stock Recently

Over the last three months, we've seen a bit of insider buying at Registry Direct. Chairman Donald McLay bought AU$23k worth of shares in that time. We like it when there are only buyers, and no sellers. However, in this case the amount invested recently is quite small.

Does Registry Direct Boast High Insider Ownership?

Many investors like to check how much of a company is owned by insiders. I reckon it's a good sign if insiders own a significant number of shares in the company. Registry Direct insiders own 71% of the company, currently worth about AU$3.7m based on the recent share price. 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 Does This Data Suggest About Registry Direct Insiders?

Insider purchases may have been minimal, in the last three months, but there was no selling at all. That said, the purchases were not large. While we gain confidence from high insider ownership of Registry Direct, we can't say the same about their transactions in the last year, in the absence of further purchases. Along with insider transactions, I recommend checking if Registry Direct is growing revenue. This free chart of historic revenue and earnings should make that easy.

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.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.