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 shareholders might well want to know whether insiders have been buying or selling shares in Goodman Group (ASX:GMG).
Do Insider Transactions Matter?
It’s quite normal to see company insiders, such as board members, trading in company stock, from time to time. 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.’
Goodman Group Insider Transactions Over The Last Year
In the last twelve months, the biggest single sale by an insider was when Group CEO & Director Gregory Goodman sold AU$9.5m worth of shares at a price of AU$10.59 per share. That means that an insider was selling shares at below the current price (AU$10.75). While sellers have a variety of reasons for selling, this isn’t particularly great to see. When an insider sells below the current price, it does tend to make us wonder about the current valuation. Please note, however, that this single sale was 63.1% of Gregory Goodman’s stake.
Happily, we note that in the last year insiders paid AU$450k for 49.82k shares. On the other hand they divested 1.41m shares, for AU$15m. All up, insiders sold more shares in Goodman Group than they bought, over the last year. The sellers received a price of around AU$10.60, on average. We don’t gain confidence from insider selling below the recent share price. Of course, the sales could be motivated for a multitude of reasons, so we shouldn’t jump to conclusions. You can see a visual depiction of insider transactions (by individuals) over the last 12 months, below. By clicking on the graph below, you can see the precise details of each insider transaction!
If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).
Insiders at Goodman Group Have Sold Stock Recently
The last quarter saw substantial insider selling of Goodman Group shares. Specifically, Deputy Group CEO Anthony Rozic ditched AU$5.4m worth of shares in that time, and we didn’t record any purchases whatsoever. Overall this makes us a bit cautious, but it’s not the be all and end all.
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 Goodman Group insiders own 0.4% of the company, worth about AU$72m. 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 Does This Data Suggest About Goodman Group Insiders?
An insider hasn’t bought Goodman Group stock in the last three months, but there was some selling. And our longer term analysis of insider transactions didn’t bring confidence, either. But since Goodman Group is profitable and growing, we’re not too worried by this. While insiders do own shares, they don’t own a heap, and they have been selling. We’re in no rush to buy! Of course, the future is what matters most. So if you are interested in Goodman Group, you should check out this free report on analyst forecasts for the company.
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.
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 firstname.lastname@example.org.