Manage episode 376977705 series 2656707
Millions of dollars of shares are sold and bought each month by company directors. Often, investors watch these transactions as a signal that leadership teams know something we don't. So should you buy or sell if leadership teams are too?
Firstly, there are a variety of reasons (or maybe excuses) why a director may sell stock in their company. Take tax reasons, for example, or divorce settlements (half of all first marriages end in divorce, after all), or just because they need the cash - to purchase a new home or holiday house, for instance.
Of course, it could also mean these directors think their company's shares have run too hard - or that there are troubles on the horizon that the rest of the market doesn't know about, yet.
Interestingly, FirstLinks found that companies tended to perform worse if there had been director selling over a six-month period than companies where no director sales had occurred.
That said, there's only one reason a director would buy shares, and that's because they think their stock's share price is about to go up.
So in this episode, Centennial Asset Management's Matthew Kidman was joined by Auscap Asset Management's Will Mumford and IML's Michael O'Neill for their analysis of three stocks where director selling has occurred over the past month.
Plus, to even the score, they also name one stock they have been buying on the back of reporting season.
Note: This episode was filmed on Wednesday 6 September 2023. You can read an edited transcript below.