Stock Analysis

CGI Inc. (TSE:GIB.A) Insiders Increased Their Holdings

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TSX:GIB.A
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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 shareholders might well want to know whether insiders have been buying or selling shares in CGI Inc. (TSE:GIB.A).

Do Insider Transactions Matter?

It's quite normal to see company insiders, such as board members, trading in company stock, from time to time. However, most countries require that the company discloses such transactions to the market.

Insider transactions are not the most important thing when it comes to long-term investing. But equally, we would consider it foolish to ignore insider transactions altogether. 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'.

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The Last 12 Months Of Insider Transactions At CGI

Over the last year, we can see that the biggest insider purchase was by insider George Cope for CA$1.0m worth of shares, at about CA$92.30 per share. That implies that an insider found the current price of CA$99.54 per share to be enticing. While their view may have changed since the purchase was made, this does at least suggest they have had confidence in the company's future. While we always like to see insider buying, it's less meaningful if the purchases were made at much lower prices, as the opportunity they saw may have passed. The good news for CGI share holders is that insiders were buying at near the current price.

Over the last year, we can see that insiders have bought 19.50k shares worth CA$1.7m. But they sold 12.07k shares for CA$1.0m. In the last twelve months there was more buying than selling by CGI insiders. 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!

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TSX:GIB.A Insider Trading Volume December 16th 2020

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).

Does CGI Boast High Insider Ownership?

For a common shareholder, it is worth checking how many shares are held by company insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. It's great to see that CGI insiders own 2.0% of the company, worth about CA$487m. This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.

So What Do The CGI Insider Transactions Indicate?

It doesn't really mean much that no insider has traded CGI shares in the last quarter. On a brighter note, the transactions over the last year are encouraging. Judging from their transactions, and high insider ownership, CGI insiders feel good about the company's future. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing CGI. Case in point: We've spotted 1 warning sign for CGI 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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