We often see insiders buying up shares in companies that perform well over the long term. On the other hand, we'd be remiss not to mention that insider sales have been known to precede tough periods for a business. So we'll take a look at whether insiders have been buying or selling shares in Greif, Inc. (NYSE:GEF).
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 would never suggest that investors should base their decisions solely on what the directors of a company have been doing. But logic dictates you should pay some attention to whether insiders are buying or selling shares. For example, a Harvard University study found that 'insider purchases earn abnormal returns of more than 6% per year'.
Greif Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider sale was by the Executive VP, Gary Martz, for US$1.4m worth of shares, at about US$58.00 per share. So what is clear is that an insider saw fit to sell at around the current price of US$57.72. While insider selling is a negative, to us, it is more negative if the shares are sold at a lower price. In this case, the big sale took place at around the current price, so it's not too bad (but it's still not a positive).
Over the last year we saw more insider selling of Greif shares, than buying. The chart below shows insider transactions (by companies and individuals) over the last year. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.
Greif Insiders Are Selling The Stock
We have seen a bit of insider selling at Greif, over the last three months. Executive VP Gary Martz sold just US$32k worth of shares in that time. Neither the lack of buying nor the presence of selling is heartening. But the amount sold isn't enough for us to put any weight on it.
Insider Ownership of Greif
Many investors like to check how much of a company is owned by insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. It's great to see that Greif insiders own 35% of the company, worth about US$977m. Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.
What Might The Insider Transactions At Greif Tell Us?
While there has not been any insider buying in the last three months, there has been selling. However, the sales are not big enough to concern us at all. It's great to see high levels of insider ownership, but looking back over the last year, we don't gain confidence from the Greif insiders selling. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. At Simply Wall St, we found 1 warning sign for Greif that deserve your attention before buying any shares.
But note: Greif 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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