Georgia Capital Insiders Made A Wise Decision By Selling GEL3.0m Worth Of Stock

Despite a 14% gain in Georgia Capital PLC's (LON:CGEO) stock price this week, shareholders shouldn't let up. In spite of the relatively cheap prices, insiders made the decision to sell GEL3.0m worth of stock in the last 12 months. This could be a warning indicator of vulnerabilities in the future.

While insider transactions are not the most important thing when it comes to long-term investing, logic dictates you should pay some attention to whether insiders are buying or selling shares.

Check out our latest analysis for Georgia Capital

The Last 12 Months Of Insider Transactions At Georgia Capital

In the last twelve months, the biggest single purchase by an insider was when Independent Non-Executive Director Neil Janin bought UK£1.4m worth of shares at a price of UK£13.14 per share. So it's clear an insider wanted to buy, at around the current price, which is UK£14.18. Of course they may have changed their mind. But this suggests they are optimistic. We do always like to see insider buying, but it is worth noting if those purchases were made at well below today's share price, as the discount to value may have narrowed with the rising price. The good news for Georgia Capital share holders is that insiders were buying at near the current price. We note that Neil Janin was both the biggest buyer and the biggest seller.

In the last twelve months insiders purchased 139.56k shares for UK£1.8m. But insiders sold 231.84k shares worth UK£3.0m. In total, Georgia Capital 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 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.

Insiders At Georgia Capital Have Bought Stock Recently

Over the last quarter, Georgia Capital insiders have spent a meaningful amount on shares. Not only was there no selling that we can see, but they collectively bought UK£65k worth of shares. This is a positive in our book as it implies some confidence.

Does Georgia Capital Boast High Insider Ownership?

Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. A high insider ownership often makes company leadership more mindful of shareholder interests. Georgia Capital insiders own about UK£45m worth of shares. That equates to 9.3% of the company. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.

So What Do The Georgia Capital Insider Transactions Indicate?

It is good to see recent purchasing. On the other hand the transaction history, over the last year, isn't so positive. The more recent transactions are a positive, but Georgia Capital insiders haven't shown the sustained enthusiasm that we look for, although they do own a decent number of shares, overall. In short they are likely aligned with shareholders. 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. Every company has risks, and we've spotted 1 warning sign for Georgia Capital you should know about.

But note: Georgia Capital 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.