We often see insiders buying up shares in companies that perform well over the long term. On the other hand, we’d be remiss not to mention that insider sales have been known to precede tough periods for a business. So shareholders might well want to know whether insiders have been buying or selling shares in GlaxoSmithKline plc (LON:GSK).
What Is Insider Buying?
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 it is perfectly logical to keep tabs on what insiders are doing. For example, a Harvard University study found that ‘insider purchases earn abnormal returns of more than 6% per year.’
The Last 12 Months Of Insider Transactions At GlaxoSmithKline
The CEO & Director, Emma Walmsley, made the biggest insider sale in the last 12 months. That single transaction was for UK£1.0m worth of shares at a price of UK£15.85 each. So it’s clear an insider wanted to take some cash off the table, even below the current price of UK£16.79. When an insider sells below the current price, it suggests that they considered that lower price to be fair. That makes us wonder what they think of the (higher) recent valuation. Please do note, however, that sellers may have a variety of reasons for selling, so we don’t know for sure what they think of the stock price. It is worth noting that this sale was only 13.1% of Emma Walmsley’s holding.
Over the last year, we can see that insiders have bought 8332.57 shares worth UK£133k. But they sold 122k for UK£1.9m. All up, insiders sold more shares in GlaxoSmithKline than they bought, over the last year. The chart below shows insider transactions (by individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
GlaxoSmithKline Insiders Bought Stock Recently
Over the last three months, we’ve seen significant insider buying at GlaxoSmithKline. Overall, four insiders shelled out UK£69k for shares in the company — and none sold. This makes one think the business has some good points.
For a common shareholder, it is worth checking how many shares are held by company insiders. We usually like to see fairly high levels of insider ownership. It appears that GlaxoSmithKline insiders own 0.03% of the company, worth about UK£25m. 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 GlaxoSmithKline Insider Transactions Indicate?
The recent insider purchases are heartening. But we can’t say the same for the transactions over the last 12 months. We don’t take much heart from transactions by GlaxoSmithKline insiders over the last year. But they own a reasonable amount of the company, and there was some buying recently. So they seem pretty well aligned, overall. If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its future.
But note: GlaxoSmithKline 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, but not derivative transactions.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.