It is not uncommon to see companies perform well in the years after insiders buy shares. The flip side of that is that there are more than a few examples of insiders dumping stock prior to a period of weak performance. So we’ll take a look at whether insiders have been buying or selling shares in The Goldman Sachs Group, Inc. (NYSE:GS).
What Is Insider Buying?
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 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 Goldman Sachs Group
In the last twelve months, the biggest single sale by an insider was when David Viniar sold US$4.4m worth of shares at a price of US$251 per share. Although we don’t gain confidence from insider selling, we note that this large sale was at well above current price of US$160. So it may not tell us anything about how insiders feel about the current share price.
Over the last year, we note insiders sold 39.04k shares worth US$10m. In total, Goldman Sachs Group insiders sold more than they bought over the last year. The average sell price was around US$260. It is certainly not great to see that insiders have sold shares in the company. But we note that the selling, on average, was at well above the recently traded price of US$160. The chart below shows insider transactions over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
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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. It’s great to see that Goldman Sachs Group insiders own 1.7% of the company, worth about US$984m. 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 Goldman Sachs Group Insider Transactions Indicate?
The fact that there have been no Goldman Sachs Group insider transactions recently certainly doesn’t bother us. It’s great to see high levels of insider ownership, but looking back at the last year, we don’t gain confidence from the Goldman Sachs Group insiders selling. Of course, the future is what matters most. So if you are interested in Goldman Sachs Group, you should check out this free report on analyst forecasts for the company.
Of course Goldman Sachs Group 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 email@example.com.