Stock Analysis

Are Insiders Selling Growthpoint Properties Limited (JSE:GRT) Stock?

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We often see insiders buying up shares in companies that perform well over the long term. 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 Growthpoint Properties Limited (JSE:GRT).

What Is Insider Buying?

Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock in the company. However, such insiders must disclose their trading activities, and not trade on inside information.

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 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'.

See our latest analysis for Growthpoint Properties

The Last 12 Months Of Insider Transactions At Growthpoint Properties

In the last twelve months, the biggest single sale by an insider was when the insider, Mzolisi Diliza, sold R99m worth of shares at a price of R18.03 per share. While we don't usually like to see insider selling, it's more concerning if the sales take place at a lower price. The good news is that this large sale was at well above current price of R12.12. So it is hard to draw any strong conclusion from it.

In the last twelve months insiders purchased 626.32k shares for R6.0m. On the other hand they divested 5.69m shares, for R100m. All up, insiders sold more shares in Growthpoint Properties than they bought, over the last year. They sold for an average price of about R17.56. We are not joyful about insider selling. However, we do note that the average sale price was significantly higher than the current share price (which is R12.12). 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!

JSE:GRT Insider Trading Volume February 1st 2021

If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.

Insiders at Growthpoint Properties Have Bought Stock Recently

There has been significantly more insider buying, than selling, at Growthpoint Properties, over the last three months. In fact, four insiders bought R3.8m worth of shares. But we did see insider selling worth R1.1m. We think insiders may be optimistic about the future, since insiders have been net buyers of shares.

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. Insiders own 1.0% of Growthpoint Properties shares, worth about R415m. 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 Growthpoint Properties Tell Us?

It is good to see recent purchasing. But we can't say the same for the transactions over the last 12 months. The high levels of insider ownership, and the recent buying by some insiders suggests they are well aligned and optimistic. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. For example, Growthpoint Properties has 3 warning signs (and 1 which doesn't sit too well with us) we think you should know about.

Of course Growthpoint Properties may not be the best stock to buy. So you may wish to see this free collection of high quality companies.

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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Growthpoint Properties

Growthpoint is the largest South African primary JSE-listed REIT with a quality portfolio of 440 directly owned properties in South Africa (RSA) valued at R73.4bn, including four hospitals and one medical chambers valued at R2.6bn owned by Growthpoint Healthcare Property Holdings (RF) Limited (GHPH).

Average dividend payer with questionable track record.