Insiders Of GEO Group Are Up 133% On Their US$3.70m Purchase

The GEO Group, Inc. (NYSE:GEO) insiders who purchased shares in the last 12 months were richly rewarded last week. The stock climbed by 10% resulting in a US$358m addition to the company’s market value. Put another way, the original US$3.70m acquisition is now worth US$8.62m.

While insider transactions are not the most important thing when it comes to long-term investing, we do think it is perfectly logical to keep tabs on what insiders are doing.

Check out our latest analysis for GEO Group

GEO Group Insider Transactions Over The Last Year

The Founder & Executive Chairman of the Board George Zoley made the biggest insider purchase in the last 12 months. That single transaction was for US$3.1m worth of shares at a price of US$12.34 each. Even though the purchase was made at a significantly lower price than the recent price (US$28.73), we still think insider buying is a positive. While it does suggest insiders consider the stock undervalued at lower prices, this transaction doesn't tell us much about what they think of current prices.

George Zoley purchased 300.00k shares over the year. The average price per share was US$12.32. 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!

GEO Group is not the only stock that insiders are buying. For those who like to find small cap companies at attractive valuations, this free list of growing companies with recent insider purchasing, could be just the ticket.

Insider Ownership Of GEO Group

Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. GEO Group insiders own 3.8% of the company, currently worth about US$142m based on the recent share price. I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.

So What Do The GEO Group Insider Transactions Indicate?

The fact that there have been no GEO Group insider transactions recently certainly doesn't bother us. However, our analysis of transactions over the last year is heartening. Judging from their transactions, and high insider ownership, GEO Group insiders feel good about the company's future. So while it's helpful to know what insiders are doing in terms of buying or selling, it's also helpful to know the risks that a particular company is facing. Our analysis shows 5 warning signs for GEO Group (1 is potentially serious!) and we strongly recommend you look at these before investing.

If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, that have HIGH return on equity 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 of direct interests only, but not derivative transactions or indirect interests.

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This article by Simply Wall St 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. Simply Wall St has no position in any stocks mentioned.