Possible Bearish Signals With Grafton Group Insiders Disposing Stock

In the last year, many Grafton Group plc (LON:GFTU) insiders sold a substantial stake in the company which may have sparked shareholders' attention. Knowing whether insiders are buying is usually more helpful when evaluating insider transactions, as insider selling can have various explanations. However, shareholders should take a deeper look if several insiders are selling stock over a specific time period.

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

See our latest analysis for Grafton Group

The Last 12 Months Of Insider Transactions At Grafton Group

In the last twelve months, the biggest single sale by an insider was when the insider, Gavin Slark, sold UK£1.2m worth of shares at a price of UK£8.18 per share. That means that an insider was selling shares at slightly below the current price (UK£8.55). We generally consider it a negative if insiders have been selling, especially if they did so below the current price, because it implies that they considered a lower price to be reasonable. 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. It is worth noting that this sale was only 41% of Gavin Slark's holding.

In the last twelve months insiders purchased 39.38k shares for UK£301k. But they sold 153.50k shares for UK£1.3m. Over the last year we saw more insider selling of Grafton Group shares, than buying. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

If you like to buy stocks that insiders are buying, rather than selling, then you might just love this free list of companies. (Hint: insiders have been buying them).

Grafton Group Insiders Bought Stock Recently

Over the last quarter, Grafton Group insiders have spent a meaningful amount on shares. Specifically, Senior Independent Director Paul Nigel Smith bought UK£99k worth of shares in that time, and we didn't record any sales whatsoever. This could be interpreted as suggesting a positive outlook.

Insider Ownership Of Grafton Group

Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. A high insider ownership often makes company leadership more mindful of shareholder interests. It's great to see that Grafton Group insiders own 8.6% of the company, worth about UK£155m. Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.

So What Do The Grafton Group Insider Transactions Indicate?

The recent insider purchase is heartening. On the other hand the transaction history, over the last year, isn't so positive. The recent buying by an insider , along with high insider ownership, suggest that Grafton Group insiders are fairly aligned, and optimistic. 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. To assist with this, we've discovered 1 warning sign that you should run your eye over to get a better picture of Grafton Group.

Of course Grafton Group may not be the best stock to buy. So you may wish to see this free collection of high quality companies.

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. 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.