Insiders At GlobalData Sold UK£23m In Stock, Alluding To Potential Weakness

In the last year, many GlobalData Plc (LON:DATA) 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.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we do think it is perfectly logical to keep tabs on what insiders are doing.

View our latest analysis for GlobalData

The Last 12 Months Of Insider Transactions At GlobalData

The CEO & Executive Director, Michael Danson, made the biggest insider sale in the last 12 months. That single transaction was for UK£22m worth of shares at a price of UK£2.01 each. So it's clear an insider wanted to take some cash off the table, even below the current price of UK£2.19. 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 2.3% of Michael Danson's holding.

All up, insiders sold more shares in GlobalData than they bought, over the last year. 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!

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

Have GlobalData Insiders Traded Recently?

In the last quarter there were insider sales totalling UK£20k. That's only a tiny bit more than the purchases, worth UK£19k. The net selling is so small that it's hard to draw any conclusions from these recent transactions.

Does GlobalData Boast High Insider Ownership?

Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. GlobalData insiders own about UK£1.1b worth of shares (which is 62% 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 GlobalData Insider Transactions Indicate?

Insider selling has just outweighed insider buying in the last three months. But the difference isn't enough to have us worried. It's great to see high levels of insider ownership, but looking back over the last year, we'd need to see more buying to gain confidence from the GlobalData insider transactions. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. For instance, we've identified 2 warning signs for GlobalData (1 is significant) you should be aware of.

But note: GlobalData 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.