Insiders At Generation Development Group Sold AU$6.5m In Stock, Alluding To Potential Weakness

In the last year, many Generation Development Group Limited (ASX:GDG) insiders sold a substantial stake in the company which may have sparked shareholders' attention. When analyzing insider transactions, it is usually more valuable to know whether insiders are buying versus knowing if they are selling, as the latter sends an ambiguous message. However, if numerous insiders are selling, shareholders should investigate more.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we would consider it foolish to ignore insider transactions altogether.

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The Last 12 Months Of Insider Transactions At Generation Development Group

In the last twelve months, the biggest single sale by an insider was when the Executive Chairman, Robert Coombe, sold AU$2.2m worth of shares at a price of AU$7.40 per share. While we don't usually like to see insider selling, it's more concerning if the sales take place at a lower price. It's of some comfort that this sale was conducted at a price well above the current share price, which is AU$5.84. So it may not shed much light on insider confidence at current levels. Notably Robert Coombe was also the biggest buyer, having purchased AU$1.4m worth of shares.

In the last twelve months insiders purchased 325.64k shares for AU$1.4m. But they sold 942.00k shares for AU$6.5m. Over the last year we saw more insider selling of Generation Development Group shares, than buying. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

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Insiders At Generation Development Group Have Sold Stock Recently

The last quarter saw substantial insider selling of Generation Development Group shares. In total, insiders dumped AU$5.4m worth of shares in that time, and we didn't record any purchases whatsoever. This may suggest that some insiders think that the shares are not cheap.

Does Generation Development Group 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. A high insider ownership often makes company leadership more mindful of shareholder interests. It's great to see that Generation Development Group insiders own 19% of the company, worth about AU$441m. I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.

So What Do The Generation Development Group Insider Transactions Indicate?

Insiders sold Generation Development Group shares recently, but they didn't buy any. Zooming out, the longer term picture doesn't give us much comfort. But it is good to see that Generation Development Group is growing earnings. It is good to see high insider ownership, but the insider selling leaves us cautious. While it's good to be aware of what's going on with the insider's ownership and transactions, we make sure to also consider what risks are facing a stock before making any investment decision. To help with this, we've discovered 2 warning signs (1 is a bit concerning!) that you ought to be aware of before buying any shares in Generation Development Group.

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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 of direct interests only, but not derivative transactions or indirect interests.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.