We've lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So we'll take a look at whether insiders have been buying or selling shares in Gencor Industries, Inc. (NASDAQ:GENC).
What Is Insider Buying?
It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, most countries require that the company discloses such transactions to the market.
We don't think shareholders should simply follow insider transactions. But logic dictates you should pay some attention to whether insiders are buying or selling shares. For example, a Harvard University study found that 'insider purchases earn abnormal returns of more than 6% per year'.
Gencor Industries Insider Transactions Over The Last Year
In the last twelve months, the biggest single sale by an insider was when the Independent Director, James Sharp, sold US$87k worth of shares at a price of US$14.81 per share. We generally don't like to see insider selling, but the lower the sale price, the more it concerns us. The silver lining is that this sell-down took place above the latest price (US$12.65). So it may not shed much light on insider confidence at current levels.
Gencor Industries insiders didn't buy any shares 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!
I will like Gencor Industries better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
Gencor Industries Insiders Are Selling The Stock
The last quarter saw substantial insider selling of Gencor Industries shares. In total, insiders dumped US$177k worth of shares in that time, and we didn't record any purchases whatsoever. In light of this it's hard to argue that all the insiders think that the shares are a bargain.
Insider Ownership of Gencor Industries
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. Gencor Industries insiders own about US$54m worth of shares. That equates to 29% 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 Gencor Industries Insider Transactions Indicate?
Insiders sold Gencor Industries shares recently, but they didn't buy any. Looking to the last twelve months, our data doesn't show any insider buying. On the plus side, Gencor Industries makes money, and is growing profits. Insiders own shares, but we're still pretty cautious, given the history of sales. We'd practice some caution before buying! In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Gencor Industries. To assist with this, we've discovered 2 warning signs that you should run your eye over to get a better picture of Gencor Industries.
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.
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