Are Insiders Selling Rio Tinto Group (LON:RIO) Stock?

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It is not uncommon to see companies perform well in the years after insiders buy shares. On the other hand, we'd be remiss not to mention that insider sales have been known to precede tough periods for a business. So we'll take a look at whether insiders have been buying or selling shares in Rio Tinto Group (LON:RIO).

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 it is perfectly logical to keep tabs on what insiders are doing. For example, a Harvard University study found that 'insider purchases earn abnormal returns of more than 6% per year.'

View our latest analysis for Rio Tinto Group

The Last 12 Months Of Insider Transactions At Rio Tinto Group

Over the last year, we can see that the biggest insider sale was by Jean-Sébastien Jacques, for UK£566k worth of shares, at about UK£43.27 per share. So it's clear an insider wanted to take some cash off the table, even below the current price of UK£46.97. We generally consider it a negative if insiders have been selling on market, especially if they did so below the current price, because it implies that they considered a lower price to be reasonable. However, while insider selling is sometimes discouraging, it's only a weak signal. There were no large open-market purchases during the past 12 months.

All up, insiders sold more shares in Rio Tinto Group than they bought, over the last year. 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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Are Rio Tinto Group Insiders Buying Or Selling?

In the last three months, insiders sold US$1.1k. However that only slightly eclipses the US$353 worth of purchases. Ultimately the overall selling isn't enough to tell us much.

Insider Ownership

I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with insiders. We usually like to see fairly high levels of insider ownership. Rio Tinto Group insiders own about UK£29m worth of shares. That equates to 0.04% of the company. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.

What Might The Insider Transactions At Rio Tinto Group Tell Us?

Insider selling has just outweighed insider buying in the last three months. But the net divestment is not enough to concern us at all. Recent insider selling makes us a little nervous, in light of the broader picture of Rio Tinto Group insider transactions. But it's good to see that insiders own shares in the company. If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its future.

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.

An earlier version of this article incorrectly stated that Alfred Barrios had sold a large number of shares on the open market. This was incorrect and we apologise sincerely for the error.

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.