We often see insiders buying up shares in companies that perform well over the long term. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So we'll take a look at whether insiders have been buying or selling shares in GTN Limited (ASX:GTN).
What Is Insider Selling?
Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock in the company. However, most countries require that the company discloses such transactions to the market.
We don't think shareholders should simply follow insider transactions. 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'.
GTN Insider Transactions Over The Last Year
The MD, CEO, William Yde, made the biggest insider sale in the last 12 months. That single transaction was for AU$264k worth of shares at a price of AU$0.33 each. That means that even when the share price was below the current price of AU$0.39, an insider wanted to cash in some shares. When an insider sells below the current price, it suggests that they considered that lower price to be fair. That makes us wonder what they think of the (higher) recent valuation. While insider selling is not a positive sign, we can't be sure if it does mean insiders think the shares are fully valued, so it's only a weak sign. We note that the biggest single sale was only 22% of William Yde's holding. William Yde was the only individual insider to sell shares in the last twelve months.
In the last twelve months insiders purchased 291.64k shares for AU$115k. But insiders sold 800.00k shares worth AU$264k. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. By clicking on the graph below, you can see the precise details of each insider transaction!
If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.
Insiders at GTN Have Bought Stock Recently
Over the last three months, we've seen a bit of insider buying at GTN. Independent Non-Executive Director Corinna Keller purchased AU$19k worth of shares in that period. It's good to see the insider buying, as well as the lack of recent sellers. However, in this case the amount invested recently is quite small.
For a common shareholder, it is worth checking how many shares are held by company insiders. We usually like to see fairly high levels of insider ownership. From looking at our data, insiders own AU$2.4m worth of GTN stock, about 2.9% of the company. We prefer to see high levels of insider ownership.
What Might The Insider Transactions At GTN Tell Us?
Insider purchases may have been minimal, in the last three months, but there was no selling at all. That said, the purchases were not large. Our analysis of GTN insider transactions leaves us unenthusiastic. And we're not picking up on high enough insider ownership to give us any comfort. While we like knowing 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. Case in point: We've spotted 2 warning signs for GTN you should be aware of.
If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, that have HIGH return on equity 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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