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 shareholders might well want to know whether insiders have been buying or selling shares in Griffon Corporation (NYSE:GFF).
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, rules govern insider transactions, including certain disclosures.
We don’t think shareholders should simply follow insider transactions. 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 Griffon
Over the last year, we can see that the biggest insider purchase was by Chairman of the Board & CEO Ronald Kramer for US$364k worth of shares, at about US$12.20 per share. So it’s clear an insider wanted to buy, even at a higher price. Their view may have changed since then, but at least it shows they felt optimistic at the time. We generally consider it a positive if insiders have been buying on market, even above the current price.
Over the last year, we can see that insiders have bought 48.12k shares worth US$691k. In total, Griffon insiders bought more than they sold over the last year. They paid about US$14.36 on average. These transactions suggest that insiders have considered the current price of US$11.83 attractive. You can see a visual depiction of insider transactions 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!
If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).
Insiders at Griffon Have Bought Stock Recently
Over the last three months, we’ve seen significant insider buying at Griffon. We can see that Ronald Kramer paid US$364k for shares in the company. No-one sold. This is a positive in our book as it implies some confidence.
Many investors like to check how much of a company is owned by insiders. I reckon it’s a good sign if insiders own a significant number of shares in the company. Insiders own 14% of Griffon shares, worth about US$68m. This level of insider ownership is good but just short of being particularly stand-out, but it certainly does suggest a reasonable degree of alignment.
What Might The Insider Transactions At Griffon Tell Us?
It is good to see recent insider purchase. And the longer term insider transactions also give us confidence. While the overall levels of insider ownership are below what we’d like to see, the history of transactions imply that Griffon insiders are reasonably well aligned, and optimistic for the future. 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.
Of course Griffon may not be the best stock to buy. So you may wish to see this free collection of high quality companies.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at firstname.lastname@example.org.