Should You Take Comfort From Insider Transactions At Genetic Technologies Limited (ASX:GTG)?

We've lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. The flip side of that is that there are more than a few examples of insiders dumping stock prior to a period of weak performance. So we'll take a look at whether insiders have been buying or selling shares in Genetic Technologies Limited (ASX:GTG).

Do Insider Transactions Matter?

It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, most countries require that the company discloses such transactions to the market.

We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. But logic dictates you should pay some attention to whether insiders are buying or selling shares. For example, a Columbia University study found that 'insiders are more likely to engage in open market purchases of their own company’s stock when the firm is about to reveal new agreements with customers and suppliers'.

See our latest analysis for Genetic Technologies

Genetic Technologies Insider Transactions Over The Last Year

The Independent Non-Executive Chairman Peter Rubinstein made the biggest insider purchase in the last 12 months. That single transaction was for AU$315k worth of shares at a price of AU$0.0052 each. Although we like to see insider buying, we note that this large purchase was at significantly below the recent price of AU$0.007. 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.

Over the last year, we can see that insiders have bought 105.07m shares worth AU$554k. But insiders sold 570.50k shares worth AU$3.4k. Overall, Genetic Technologies insiders were net buyers during the last year. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. By clicking on the graph below, you can see the precise details of each insider transaction!

There are always plenty of stocks that insiders are buying. So if that suits your style you could check each stock one by one or you could take a look at this free list of companies. (Hint: insiders have been buying them).

Insider Ownership of Genetic Technologies

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 our data, it seems that Genetic Technologies insiders own 8.5% of the company, worth about AU$4.9m. But they may have an indirect interest through a corporate structure that we haven't picked up on. We do generally prefer see higher levels of insider ownership.

So What Does This Data Suggest About Genetic Technologies Insiders?

There haven't been any insider transactions in the last three months -- that doesn't mean much. But insiders have shown more of an appetite for the stock, over the last year. The transactions are fine but it'd be more encouraging if Genetic Technologies insiders bought more shares in the company. 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. For example, Genetic Technologies has 4 warning signs (and 2 which are a bit unpleasant) we think you should know about.

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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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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