Stock Analysis

Have Insiders Been Buying Gale Pacific Limited (ASX:GAP) Shares?

ASX:GAP
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We've lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. On the other hand, we'd be remiss not to mention that insider sales have been known to precede tough periods for a business. So before you buy or sell Gale Pacific Limited (ASX:GAP), you may well want to know whether insiders have been buying or selling.

What Is Insider Buying?

It's quite normal to see company insiders, such as board members, trading in company stock, from time to time. However, such insiders must disclose their trading activities, and not trade on inside information.

We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. But it is perfectly logical to keep tabs on what insiders are doing. For example, a Harvard University study found that 'insider purchases earn abnormal returns of more than 6% per year'.

View our latest analysis for Gale Pacific

Gale Pacific Insider Transactions Over The Last Year

In the last twelve months, the biggest single purchase by an insider was when Non Executive Chairman David Allman bought AU$116k worth of shares at a price of AU$0.13 per share. Although we like to see insider buying, we note that this large purchase was at significantly below the recent price of AU$0.32. While it does suggest insiders consider the stock undervalued at lower prices, this transaction doesn't tell us much about what they think of current prices.

While Gale Pacific insiders bought shares during the last year, they didn't sell. The chart below shows insider transactions (by companies and individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!

insider-trading-volume
ASX:GAP Insider Trading Volume November 23rd 2020

There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of growing companies that insiders are buying.

Does Gale Pacific Boast High Insider Ownership?

Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. I reckon it's a good sign if insiders own a significant number of shares in the company. Our data indicates that Gale Pacific insiders own about AU$5.1m worth of shares (which is 5.9% of the company). We do note, however, it is possible insiders have an indirect interest through a private company or other corporate structure. We do generally prefer see higher levels of insider ownership.

So What Does This Data Suggest About Gale Pacific Insiders?

It doesn't really mean much that no insider has traded Gale Pacific shares in the last quarter. But insiders have shown more of an appetite for the stock, over the last year. While we have no worries about the insider transactions, we'd be more comfortable if they owned more Gale Pacific stock. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Gale Pacific. To that end, you should learn about the 6 warning signs we've spotted with Gale Pacific (including 2 which are a bit unpleasant).

But note: Gale Pacific may not be the best stock to buy. So take a peek at this free list of interesting companies with high ROE and low debt.

For the purposes of this article, insiders are those individuals who report their transactions to the relevant regulatory body. We currently account for open market transactions and private dispositions, but not derivative transactions.

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This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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