Although Rackspace Technology, Inc. (NASDAQ:RXT) shareholders have enjoyed a great week with the stock up 14%, insiders who sold stock over the past year haven't fared as well. They could have sold their shares at much higher prices and gotten a better return on their investment if they had waited.
While insider transactions are not the most important thing when it comes to long-term investing, logic dictates you should pay some attention to whether insiders are buying or selling shares.
The Last 12 Months Of Insider Transactions At Rackspace Technology
Over the last year, we can see that the biggest insider sale was by the President, Amar Maletira, for US$144k worth of shares, at about US$1.30 per share. So it's clear an insider wanted to take some cash off the table, even below the current price of US$2.40. When an insider sells below the current price, it suggests that they considered that lower price to be fair. That makes us wonder what they think of the (higher) recent valuation. While insider selling is not a positive sign, we can't be sure if it does mean insiders think the shares are fully valued, so it's only a weak sign. This single sale was just 2.3% of Amar Maletira's stake.
Over the last year we saw more insider selling of Rackspace Technology shares, than buying. The chart below shows insider transactions (by companies and individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!
I will like Rackspace Technology better if I see some big insider buys. While we wait, check out this free list of undervalued and small cap stocks with considerable, recent, insider buying.
Insider Ownership Of Rackspace Technology
Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. I reckon it's a good sign if insiders own a significant number of shares in the company. Insiders own 8.7% of Rackspace Technology shares, worth about US$43m. While this is a strong but not outstanding level of insider ownership, it's enough to indicate some alignment between management and smaller shareholders.
What Might The Insider Transactions At Rackspace Technology Tell Us?
It doesn't really mean much that no insider has traded Rackspace Technology shares in the last quarter. We don't take much encouragement from the transactions by Rackspace Technology insiders. But we do like the fact that insiders own a fair chunk of the company. So while it's helpful to know what insiders are doing in terms of buying or selling, it's also helpful to know the risks that a particular company is facing. For example, Rackspace Technology has 4 warning signs (and 1 which is a bit concerning) we think you should know about.
Of course Rackspace Technology 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 of direct interests only, but not derivative transactions or indirect interests.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.