One of the oldest share market adages is that company insiders or management will sell shares for many reasons but they only buy for one.
Because they think the shares are undervalued and going higher in time.
So it's always worth keeping on an eye on insider buying and selling at different companies.
For example this week we saw a director of Accent Group Ltd (ASX: Ax1) sell 4 million shares at $1.58 for around $6.32 million with no explanation, to suggest this particular director might feel the shoe retailer is fully valued and now might be a good time to cash in his chips.
While on the other hand the chief operating officer (COO) at IT hardware distributor Dicker Data Ltd (ASX: DDR), Vladimir Mitnovetski, recently bought nearly 56,000 shares on-market at $4.06 in the company for around $225,000. And he already holds more than 2.5 million shares.
A couple of points to note here. First, Dicker Data shares have surged 41% over just the last six months and the COO is not likely to be tipping more of his personal wealth into the business unless he thought the shares have room to run higher.
Second, there's probably no one who has a better idea of how a IT hardware distribution business is tracking than its own COO.
Mr Mitnovetski has also previously bought shares near record highs only for them to move higher on the back of positive operating updates from the business.
Dicker Data also pays out all its cash profits in fully franked quarterly dividends and at today's price of $4.18 is likely to offer a forward yield around 5% plus franking credits.
You can't ask for much more than that plus It's also forecasting double-digit growth profit growth in fiscal 2019 – you can't ask for more than that as an income-oriented investor.
As such Dicker Data may still offer strong total returns for today's buyers, while Accent Group is another income-oriented stock I like, but the director selling may put some investors off until its next trading update.
