Possible Bearish Signals With CGI Insiders Disposing Stock

Over the past year, many CGI Inc. (TSE:GIB.A) insiders sold a significant stake in the company which may have piqued investors' interest. 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, shareholders should take a deeper look if several insiders are selling stock over a specific time period.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, logic dictates you should pay some attention to whether insiders are buying or selling shares.

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CGI Insider Transactions Over The Last Year

In the last twelve months, the biggest single sale by an insider was when the insider, Timothy Hurlebaus, sold CA$1.4m worth of shares at a price of CA$149 per share. That means that an insider was selling shares at around the current price of CA$144. While insider selling is a negative, to us, it is more negative if the shares are sold at a lower price. We note that this sale took place at around the current price, so it isn't a major concern, though it's hardly a good sign.

In the last twelve months insiders purchased 17.21k shares for CA$2.5m. But they sold 32.48k shares for CA$5.0m. In total, CGI insiders sold more than they bought over the last year. The chart below shows insider transactions (by companies and individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

See our latest analysis for CGI

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Insiders At CGI Have Bought Stock Recently

There has been significantly more insider buying, than selling, at CGI, over the last three months. Insiders spent CA$2.5m on shares. But insiders only sold shares worth CA$329k. We think insiders may be optimistic about the future, since insiders have been net buyers of shares.

Insider Ownership Of CGI

Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. I reckon it's a good sign if insiders own a significant number of shares in the company. CGI insiders own about CA$196m worth of shares (which is 0.6% of the company). 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 CGI Insider Transactions Indicate?

It's certainly positive to see the recent insider purchases. On the other hand the transaction history, over the last year, isn't so positive. The recent buying by some insiders , along with high insider ownership, suggest that CGI insiders are fairly aligned, and optimistic. Therefore, you should definitely take a look at this FREE report showing analyst forecasts for CGI.

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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.