It is not uncommon to see companies perform well in the years after insiders buy shares. 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 Greenhill & Co., Inc. (NYSE:GHL).
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, 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 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'.
The Last 12 Months Of Insider Transactions At Greenhill
In the last twelve months, the biggest single purchase by an insider was when Chairman & CEO Scott Bok bought US$1.3m worth of shares at a price of US$11.21 per share. Even though the purchase was made at a significantly lower price than the recent price (US$16.84), 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.
Happily, we note that in the last year insiders paid US$3.5m for 302.41k shares. On the other hand they divested 175.93k shares, for US$2.6m. Overall, Greenhill insiders were net buyers during the last year. The chart below shows insider transactions (by companies and individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
There are always plenty of stocks that insiders are buying. So if that suits your style you could check each stock one by one or you could take a look at this free list of companies. (Hint: insiders have been buying them).
Insiders at Greenhill Have Sold Stock Recently
There was substantially more insider selling, than buying, of Greenhill shares over the last three months. In that time, insiders dumped US$2.6m worth of shares. On the other hand we note insiders bought US$562k worth of shares. Because the selling vastly outweighs the buying, we'd say this is a somewhat bearish sign.
Does Greenhill Boast High Insider Ownership?
I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with insiders. I reckon it's a good sign if insiders own a significant number of shares in the company. Greenhill insiders own about US$78m worth of shares. That equates to 24% of the company. We've certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.
What Might The Insider Transactions At Greenhill Tell Us?
Unfortunately, there has been more insider selling of Greenhill stock, than buying, in the last three months. But we take heart from prior transactions. We like that insiders own a fair amount of the company. So we're happy enough to look past some selling. 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. You'd be interested to know, that we found 4 warning signs for Greenhill and we suggest you have a look.
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, but not derivative transactions.
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