The former CEO of REA Group Limited (ASX: REA) has sold almost $1 million of shares, does that mean we should worry?
REA Group is the owner of Australia’s most popular real estate portal, realestate.com.au. It owns other property leading sites such as realcommercial.com.au too. It also has stakes in several other international property sites in the US, South East Asia and India.
REA Group Insider Share Sale
It was announced this morning that the former REA Group CEO Ms Tracey Fellows sold 9,100 REA Group shares on 5 September 2019 for a total of $956,428, meaning that her bank account is almost $1 million better off.
What this means is that she has reduced her holding from 16,486 REA Group shares and now she owns 7,386 shares. She still owns over half of what she previously owned, but it’s still a sizeable sale.
Management of various companies sell shares all the time, but sometimes investors fear that a sale sometimes comes before poor results.
Investors might be thinking the opposite is going to be happening in the coming months with Australia’s property prices seemingly improving. This is what Domain Holdings Australia Ltd (ASX: DHG) is seeing as well.
So, earnings are likely to go higher over the next year with sellers more confident to put their property onto the market and hopefully achieve their desired sale price.
It’s hard to say whether we should be worried about the sale of the shares. If nearly all of Ms Fellows’ wealth was tied up in REA Group shares then I too would want to diversify my wealth away from just REA Group shares, as good as they are.
REA Group has excellent market power. It’s the biggest property portal provider, which attracts the most buyers and therefore the most sellers, which is a strong positive loop.
Is The REA Group Share Price Actually A Buy?
Ms Fellows’ share sale was not a one-way transaction. There was a buyer who thought the shares were worth buying at the sale price.
Lower interest rates justifiably push the values up of all assets. If interest rates are low for a long time then it means even higher prices.
According to CommSec, REA Group is valued at 34 times the estimated earnings for the 2021 estimated earnings. It’s not bad value, but I think there could be even better picks on the ASX, like the ones in the free growth report below.
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