Gildan Activewear Insiders Sell US$21m Of Stock, Possibly Signalling Caution

Many Gildan Activewear Inc. (TSE:GIL) insiders ditched their stock over the past year, which may be of interest to the company's shareholders. When evaluating insider transactions, knowing whether insiders are buying is usually more beneficial than knowing whether they are selling, as the latter can be open to many interpretations. However, when multiple insiders sell stock over a specific duration, shareholders should take notice as that could possibly be a red flag.

Although we don't think shareholders should simply follow insider transactions, we would consider it foolish to ignore insider transactions altogether.

We've discovered 2 warning signs about Gildan Activewear. View them for free.

Gildan Activewear Insider Transactions Over The Last Year

Notably, that recent sale by Executive VP & Chief Administrative Officer Rhodri Harries was not the only time they sold Gildan Activewear shares this year. Earlier in the year, they fetched CA$78.08 per share in a -CA$7.8m sale. While we don't usually like to see insider selling, it's more concerning if the sales take place at a lower price. The good news is that this large sale was at well above current price of CA$68.43. So it may not shed much light on insider confidence at current levels.

Over the last year, we can see that insiders have bought 32.88k shares worth CA$1.9m. But they sold 297.66k shares for CA$21m. All up, insiders sold more shares in Gildan Activewear than they bought, over the last year. They sold for an average price of about US$70.28. It's not too encouraging to see that insiders have sold at below the current price. Of course, the sales could be motivated for a multitude of reasons, so we shouldn't jump to conclusions. The chart below shows insider transactions (by companies and individuals) over the last year. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

Check out our latest analysis for Gildan Activewear

For those who like to find hidden gems this free list of small cap companies with recent insider purchasing, could be just the ticket.

Gildan Activewear Insiders Are Selling The Stock

There was substantially more insider selling, than buying, of Gildan Activewear shares over the last three months. We note insiders cashed in CA$17m worth of shares. On the other hand we note insider Willard Upchurch bought CA$650k worth of shares. Because the selling vastly outweighs the buying, we'd say this is a somewhat bearish sign.

Insider Ownership Of Gildan Activewear

I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with insiders. We usually like to see fairly high levels of insider ownership. It appears that Gildan Activewear insiders own 1.2% of the company, worth about CA$120m. While this is a strong but not outstanding level of insider ownership, it's enough to indicate some alignment between management and smaller shareholders.

So What Do The Gildan Activewear Insider Transactions Indicate?

The stark truth for Gildan Activewear is that there has been more insider selling than insider buying in the last three months. Despite some insider buying, the longer term picture doesn't make us feel much more positive. The company boasts high insider ownership, but we're a little hesitant, given the history of share sales. 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. Case in point: We've spotted 2 warning signs for Gildan Activewear you should be aware of.

But note: Gildan Activewear 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 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.