Directors' dealings
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12600000
7. Dealings in the context of recent share price
The recent share price of a company is a factor when considering the relevance of directors' dealings.
- If the share price has enjoyed a good run over the past few months and there is then significant selling by one or more directors this suggests profit taking by directors who think that the price has gone far enough, at least in the short term. That may be a sign for you to sell too.
- If several directors are buying when the share price has nose-dived over the last few months then this is usually a sign that they think the price has fallen too far and will bounce back, or they may be aware of action being taken to stem the current trend.
Again, these are general rules, and directors buying when the share price has enjoyed a good run could still indicate that the price has further to go.
Example
In late 1998 and into 1999 the share price of Merant (software and computer services sector) plummeted, prompting the directors to increase their personal holdings, with the share price rising throughout 1999 as the group introduced software to ensure Y2K compliancy.
Merant in early 1999
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