For General Capital Limited (NZSE:GEN) insiders, selling NZ$743k worth of stock earlier this year was a smart move.

By
Simply Wall St
Published
April 13, 2022
NZSE:GEN
Source: Shutterstock

Last week, General Capital Limited's (NZSE:GEN) stock jumped 12%, but insiders who sold NZ$743k worth of stock in over the past year are likely to be in a better position. Selling at an average price of NZ$0.06, which is higher than the current price, may have been the best move for these insiders because their investment would have been worth less now than when they sold.

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 General Capital

The Last 12 Months Of Insider Transactions At General Capital

The Non-executive Independent Director, Graeme Brown, made the biggest insider sale in the last 12 months. That single transaction was for NZ$743k worth of shares at a price of NZ$0.06 each. That means that an insider was selling shares at around the current price of NZ$0.055. We generally don't like to see insider selling, but the lower the sale price, the more it concerns us. We note that this sale took place at around the current price, so it isn't a major concern, though it's hardly a good sign. Graeme Brown was the only individual insider to sell over the last year.

You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

insider-trading-volume
NZSE:GEN Insider Trading Volume April 13th 2022

If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.

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. Insiders own 13% of General Capital shares, worth about NZ$1.2m, according to our data. But they may have an indirect interest through a corporate structure that we haven't picked up on. Whilst better than nothing, we're not overly impressed by these holdings.

So What Do The General Capital Insider Transactions Indicate?

There haven't been any insider transactions in the last three months -- that doesn't mean much. Our analysis of General Capital insider transactions leaves us unenthusiastic. And we're not picking up on high enough insider ownership to give us any comfort. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. When we did our research, we found 3 warning signs for General Capital (1 shouldn't be ignored!) that we believe deserve your full attention.

But note: General 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, 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.