As Gamma Communications plc's (LON:GAMA)) market cap dropped by UK£52m, insiders who sold UK£4.7m worth of stock were able to offset their losses

By
Simply Wall St
Published
February 24, 2022
AIM:GAMA
Source: Shutterstock

Over the past year, insiders sold UK£4.7m worth of Gamma Communications plc (LON:GAMA) stock at an average price of UK£17.75 per share allowing them to get the most out of their money. The company’s market cap plunged by UK£52m after price dropped by 3.5% last week but insiders were able to limit their loss to an extent.

While insider transactions are not the most important thing when it comes to long-term investing, we would consider it foolish to ignore insider transactions altogether.

See our latest analysis for Gamma Communications

Gamma Communications Insider Transactions Over The Last Year

The insider, Andrew Stone, made the biggest insider sale in the last 12 months. That single transaction was for UK£3.5m worth of shares at a price of UK£17.80 each. While we don't usually like to see insider selling, it's more concerning if the sales take place at a lower price. The silver lining is that this sell-down took place above the latest price (UK£14.88). So it may not tell us anything about how insiders feel about the current share price. The only individual insider seller over the last year was Andrew Stone.

Andrew Stone ditched 265.00k shares over the year. The average price per share was UK£17.75. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

insider-trading-volume
AIM:GAMA Insider Trading Volume February 24th 2022

For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

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. I reckon it's a good sign if insiders own a significant number of shares in the company. From looking at our data, insiders own UK£3.5m worth of Gamma Communications stock, about 0.2% of the company. However, it's possible that insiders might have an indirect interest through a more complex structure. We prefer to see high levels of insider ownership.

So What Does This Data Suggest About Gamma Communications Insiders?

There haven't been any insider transactions in the last three months -- that doesn't mean much. The insider transactions at Gamma Communications are not inspiring us to buy. And we're not picking up on high enough insider ownership to give us any comfort. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Gamma Communications. In terms of investment risks, we've identified 1 warning sign with Gamma Communications and understanding it should be part of your investment process.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting 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.

Discounted cash flow calculation for every stock

Simply Wall St does a detailed discounted cash flow calculation every 6 hours for every stock on the market, so if you want to find the intrinsic value of any company just search here. It’s FREE.

Make Confident Investment Decisions

Simply Wall St's Editorial Team provides unbiased, factual reporting on global stocks using in-depth fundamental analysis.
Find out more about our editorial guidelines and team.