Insider buying and selling is watched carefully by many in the market.
That's because when an insider buys shares, it is often interpreted as a buy signal.
After all, an insider knows a company better than anyone. So, if they are buying shares, then they must have confidence in its outlook and feel its shares are good value.
It is the opposite when insiders sell shares. This can cause panic among investors. Which is understandable, given that it is unlikely you would part with your investments if you believed they were undervalued.
So, with an ASX 200 share reporting that its CEO has just sold a large number of shares, should investors be worried? Let's look at the transaction.
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Which ASX 200 share reported insider selling?
The company in question is TechnologyOne Ltd (ASX: TNE), which is a leading enterprise software provider.
According to a change of director's interest notice, the ASX 200 share's CEO, Edward Chung, offloaded 254,917 shares through an on-market trade at the end of last week.
Chung received a total of approximately $3.9 million for the shares or an average of $15.26 per share.
But before you panic, it is worth highlighting that even after this sale, Chung still has a large shareholding.
The notice reveals that following the sale, the CEO is left with 1,085,085 options and 700,068 ordinary shares. Therefore, it is fair to say that his interests remain firmly aligned with shareholders.
Should you buy shares?
The team at Goldman Sachs believes investors should be buying this ASX 200 share. It currently has a buy rating and an $18.05 price target on its shares.
This implies a potential upside of approximately 17% for investors over the next 12 months. Goldman said:
TNE has executed well on transitioning its customer base to the cloud and driving incremental cross-sell, in our view building the case for sustainable ~10-15% ARR growth with upside to TNE's 115% NRR target.
