Insider buying is often regarded as a bullish indicator, as few people should know a company better than its own directors.
The theory is that if they have the confidence to buy shares, it could be a sign that things are going well and they expect them to appreciate in value.
Conversely, when directors sell shares it is often regarded as a bearish indicator as you’d be unlikely to sell shares if you felt they were about to increase in value.
With that in mind, here are two ASX shares which have recently experienced notable insider selling:
Goodman Group (ASX: GMG)
According to a change of director’s interest notice, the Deputy Group Chief Executive Officer and Chief Executive Officer North America of this integrated commercial and industrial property company has been selling shares this month. The notice reveals that Anthony Rozic sold a total of 278,333 Goodman shares through a series of on-market trades between 1 September and 3 September.
Mr Rozic received a total consideration of approximately $5.1 million, which equates to an average of ~$18.28 per share. Despite this sale, the executive still has a meaningful interest in the company. He’s left with ~1.82 million Goodman shares and ~1.6 million performance rights. The Goodman share price is up over 35% since the start of the year. This is thanks to its strong performance during the pandemic, due partly to its exposure to ecommerce markets.
Nitro Software Ltd (ASX: NTO)
A change of director’s interest notice reveals that this software company’s non-executive director has been selling a large number of shares in September. According to the notice, John Dyson has sold 8,683,462 shares through an off-market trade on 9 September.
These shares were sold for a total of ~$19.1 million, which equates to an average of $2.20 per share. With the Nitro share price up 34% year to date on the sale date, it appears as though the director wanted to lock in some gains. Mr Dyson still has a considerable interest in the growing company of approximately 17.5 million shares.
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Nitro Software Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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