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We've lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. 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 before you buy or sell Genpact Limited (NYSE:G), you may well want to know whether insiders have been buying or selling.
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 on the market. 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 it is perfectly logical to keep tabs on what insiders are doing. 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 Genpact
The Senior VP & CFO, Edward Fitzpatrick, made the biggest insider sale in the last 12 months. That single transaction was for US$1.7m worth of shares at a price of US$33.03 each. That means that an insider was selling shares at slightly below the current price (US$38.09). When an insider sells below the current price, it suggests that they considered that lower price to be fair. That makes us wonder what they think of the (higher) recent valuation. While insider selling is not a positive sign, we can't be sure if it does mean insiders think the shares are fully valued, so it's only a weak sign. It is worth noting that this sale was 65.4% of Edward Fitzpatrick's holding.
In the last twelve months insiders netted US$2.0m for 61581 shares sold. Genpact insiders didn't buy any shares over the last year. You can see a visual depiction of insider transactions (by individuals) over the last 12 months, below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.
Genpact Insiders Are Selling The Stock
Over the last three months, we've seen a bit of insider selling at Genpact. Senior VP Heather White divested only US$38k worth of shares in that time. It's not great to see insider selling, nor the lack of recent buyers. But the amount sold isn't enough for us to put any weight on it.
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. It appears that Genpact insiders own 0.8% of the company, worth about US$56m. We've certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.
So What Do The Genpact Insider Transactions Indicate?
We did not see any insider buying in the last three months, but we did see selling. But given the selling was modest, we're not worried. Recent insider selling makes us a little nervous, in light of the broader picture of Genpact insider transactions. But it's good to see that insiders own shares in the company. Therefore, you should should definitely take a look at this FREE report showing analyst forecasts for Genpact.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.
For the purposes of this article, insiders are those individuals who report their transactions to the relevant regulatory body.
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