Recent insider trends for Rite Aid Corporation (NYSE:RAD) have caught the attention of investors. Insider activity is often a strong indicator of future performance in a stock, and if the data on RAD is anything to go by, investors should pay attention.
Institutions own 52.93% of Rite Aid Corporation (RAD)’s shares. The total value of these holdings, in millions, is $1,165. Among active positions in the latest quarter, 159 holders increased their positions by a total of 108.72 million shares, 223 holders decreased the positions by a total of 174.61 million shares, and 79 holders held their positions. This works out to a net decrease in ownership of 65.9 million shares, and suggests that institutions are feeling bearish about the stock.
Among new and sold out positions, 50 holders initiated new positions by a total of 23.2 million shares and 105 holders exited their positions by a total of 80.27 million shares. This nets out to a decrease of 57.07 million shares and is another bearish sign for RAD.
In the last three months, insiders executed a total of 22 trades. 18 of these were buys and 4 were sells. Insider ownership increased by a total of 4.35 million shares, which suggests that RAD’s key executives are feeling more optimistic about the outlook for the stock. The data from the past twelve months tells a similar story: insiders executed 18 buys and 20 sells, and ownership increased by a net of 4.24 million shares.
The analysis of insider buying and selling trends can be extended to the aggregate level. Short interest, which represents the number of a stock’s shares currently being shorted, captures what the market as a whole feels about a stock. Rite Aid Corporation (NYSE:RAD)’s short interest is 124.18 million shares, or 11.96% of the float. This represents a decrease of -0% in the number of shares being shorted compared to the previous reading, and implies that investors felt less pessimistic about the stock during the past two weeks.
Given what the insider ownership patterns are saying, it makes sense to consider the technicals to see if these pieces of information reach the same conclusion about the outlook for RAD. A composite of 13 technical indicators that includes measures such as moving averages and momentum oscillators suggests that RAD is a Strong sell, which implies that RAD is expected to underperform the market based on prior trading patterns.
Institutional ownership trends suggest that the stock is cheap and the insider trading data indicates that insiders are bullish. Technical indicators (also) suggest that Rite Aid Corporation (NYSE:RAD) is overvalued.