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 before you buy or sell Golden Entertainment, Inc. (NASDAQ:GDEN), you may well want to know whether insiders have been buying or selling.
What Is Insider Selling?
It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, rules govern insider transactions, and certain disclosures are required.
We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. But equally, we would consider it foolish to ignore insider transactions altogether. As Peter Lynch said, ‘insiders might sell their shares for any number of reasons, but they buy them for only one: they think the price will rise’.
Golden Entertainment Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider purchase was by Independent Director Anthony Marnell for US$1.1m worth of shares, at about US$16.85 per share. That means that an insider was happy to buy shares at above the current price of US$13.61. Their view may have changed since then, but at least it shows they felt optimistic at the time. In our view, the price an insider pays for shares is very important. Generally speaking, it catches our eye when insiders have purchased shares at above current prices, as it suggests they believed the shares were worth buying, even at a higher price.
Happily, we note that in the last year insiders paid US$1.7m for 126.77k shares. But insiders sold 9.00k shares worth US$91k. In total, Golden Entertainment insiders bought more than they sold over the last year. Their average price was about US$13.57. Although they bought at below the recent share price, it is good to see that insiders are willing to invest in the company. 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!
Golden Entertainment is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Insider Ownership of Golden Entertainment
For a common shareholder, it is worth checking how many shares are held by company insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. Golden Entertainment insiders own about US$44m worth of shares. That equates to 12% 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.
What Might The Insider Transactions At Golden Entertainment Tell Us?
There haven’t been any insider transactions in the last three months — that doesn’t mean much. But insiders have shown more of an appetite for the stock, over the last year. Insiders own shares in Golden Entertainment and we see no evidence to suggest they are worried about the future. So these insider transactions can help us build a thesis about the stock, but it’s also worthwhile knowing the risks facing this company. In terms of investment risks, we’ve identified 2 warning signs with Golden Entertainment and understanding them should be part of your investment process.
But note: Golden Entertainment 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.
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This article by Simply Wall St is general in nature. 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.
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