The Importance Of Insider Transactions At The General Electric Company (NYSE:GE)

General Electric Company ( NYSE:GE ) is a broad conglomerate built up over many years, which currently focuses on Power, Renewable Energy, Aviation, and Healthcare.

Its revenues are decreasing as it is engaged in temporarily or permanently declining industries and specialized competitors are cutting away from their market share.

It is currently in a consolidation phase - meaning that management is trying to regain control of the situation and finances.

GE is also currently unprofitable, with a large chunk of fixed assets and operational rigidity evident from the presence in multiple highly regulated fields. These fundamental characteristics should be kept in mind by investors while thinking about the long term future of the company.

The recent dividend cut, and the workforce reduction are probably some of the smarter moves by management. In fact, reducing operations and focusing on profitable segments may create value and transform the company.

Insider Transactions Review

The sale and purchase of securities by people that are closely related to a company speaks volumes about what they really think of the future of their company.

It’s not a good long term strategy for investors to blindly follow these trades, but observing the trades gives a great overview of the internal climate in the company.

So shareholders may want to know whether insiders have been buying or selling shares in the General Electric Company.

What Is Insider Selling?

It's quite normal to see company insiders, such as board members, trading in company stock, from time to time. However, such insiders must disclose their trading activities, and not trade on inside information.

Insider transactions can be predictive of some future developments in a company.

For example, a Columbia University study found that 'insiders are more likely to engage in open market purchases of their own company’s stock when the firm is about to reveal new agreements with customers and suppliers'.

See our latest analysis for General Electric.

The Last 12 Months Of Insider Transactions At General Electric

In the last twelve months, the biggest single purchase by an insider was when Independent Director Paula G. Reynolds bought US$63k worth of shares at a price of US$12.50 per share.

The chart below shows insider transactions (by companies and individuals) over the last year.

NYSE:GE Insider Trading Volume June 2021

The most notable transaction was carried out on the 4th and 5th of August by Trian Fund Management, L.P., which sold shares for a total value of US$ 167million.

This is discouraging for investors both because the transaction is a sale and that there has not been a notable pickup of shares from insiders since then.

There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of growing companies that insiders are buying.

Insider Ownership of General Electric

For a common shareholder, it is worth checking how many shares are held by company insiders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivized to build the company for the long term. General Electric insiders own 0.2% of the company, currently worth about US$299 m based on the recent share price.

Considering the very small portion of insider ownership and the historically low price of the GE stock, it can be concerning to not see any notable purchases from insiders.

So What Does This Data Suggest About General Electric Insiders?

The major transactions in the last 12 months have been those of insiders cashing out. A very small buy transaction has been made recently by an individual insider.

There is a very important piece of information here, and it’s not the purchase or sale of stock.

The most pressing insight here is the sheer absence of activity. So keep that in mind if you’re considering this stock.

You may want to think about whether this company will grow or shrink too. Luckily, you can check this free report showing analyst forecasts for its future .

Of course General Electric may not be something investors want to spend too much time on . So you may wish to see this free collection of high quality companies.

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Simply Wall St analyst Goran Damchevski and Simply Wall St have no position in any of the companies mentioned. This article 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.