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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 before you buy or sell Guardian Capital Group Limited (TSE:GCG.A), you may well want to know whether insiders have been buying or selling.
What Is Insider Selling?
It is perfectly legal for company insiders, including board members, to buy and sell stock in a 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 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 Guardian Capital Group
The Independent Director, Hans-Georg Rudloff, made the biggest insider sale in the last 12 months. That single transaction was for CA$157k worth of shares at a price of CA$23.78 each. That means that an insider was selling shares at around the current price of CA$23.70. While we don't usually like to see insider selling, it's more concerning if the sales take price at a lower price. We note that this sale took place at around the current price, so it isn't a major concern, though it's hardly a good sign. Hans-Georg Rudloff was the only individual insider to sell over the last year.
Over the last year, we can see that insiders have bought 3150 shares worth CA$74k. But insiders sold 6600 shares worth CA$157k. 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 like to buy stocks that insiders are buying, rather than selling, then you might just love this free list of companies. (Hint: insiders have been buying them).
Insiders at Guardian Capital Group Have Sold Stock Recently
Over the last three months, we've seen notably more insider selling, than insider buying, at Guardian Capital Group. We note Hans-Georg Rudloff cashed in CA$157k worth of shares. Meanwhile insiders bought CA$74k worth, as we said above. Generally this level of net selling might be considered a bit bearish.
Many investors like to check how much of a company is owned by insiders. I reckon it's a good sign if insiders own a significant number of shares in the company. Guardian Capital Group insiders own about CA$21m worth of shares. That equates to 3.5% of the company. While this is a strong but not outstanding level of insider ownership, it's enough to indicate some alignment between management and smaller shareholders.
So What Do The Guardian Capital Group Insider Transactions Indicate?
The insider sales have outweighed the insider buying, at Guardian Capital Group, in the last three months. Zooming out, the longer term picture doesn't give us much comfort. On the plus side, Guardian Capital Group makes money, and is growing profits. Insider ownership isn't particularly high, so this analysis makes us cautious about the company. So we'd only buy after careful consideration. If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its future.
Of course Guardian Capital Group may not be the best stock to buy. So you may wish to see this free collection of high quality companies.
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If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.