There are a number of reasons why a director might be inclined to sell shares but usually when they inject their own cash into their company they usually do it to make money.
On the other hand deciphering share sales might not be so straightforward – some sales could be simply a case of a director looking to diversify his risk and spread his own assets over
While executives are prohibited from acting on particular inside information there is nothing preventing them from investing into their own business by buying up shares. Insiders who have a good grasp of the workings of their business and the market mechanics could well use this to gain a well-deserved edge.
The markets are inherently efficient at eliminating abnormalities so here it would be wise to only consider direction transactions made in the last few months.