U.S. Markets close in 4 hrs 46 mins

Read This Before Buying Goodman Group (ASX:GMG) Shares

Simply Wall St

Want to participate in a short research study? Help shape the future of investing tools and you could win a $250 gift card!

We often see insiders buying up shares in companies that perform well over the long term. 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 we'll take a look at whether insiders have been buying or selling shares in Goodman Group (ASX:GMG).

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.

Insider transactions are not the most important thing when it comes to long-term investing. But equally, we would consider it foolish to ignore insider transactions altogether. As Peter Lynch said, 'insiders might sell their shares for any number of reasons, but they buy them for only one: they think the price will rise.'

View our latest analysis for Goodman Group

The Last 12 Months Of Insider Transactions At Goodman Group

Over the last year, we can see that the biggest insider sale was by the Group CEO & Director, Gregory Goodman, for AU$9.5m worth of shares, at about AU$10.59 per share. That means that an insider was selling shares at slightly below the current price (AU$16.07). 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. We note that the biggest single sale was 63.1% of Gregory Goodman's holding.

Over the last year, we can see that insiders have bought 26788 shares worth AU$312k. But insiders sold 2.5m shares worth AU$28m. In total, Goodman Group insiders sold more than they bought over the last year. 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!

ASX:GMG Recent Insider Trading, July 5th 2019

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

Does Goodman Group Boast High 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. We usually like to see fairly high levels of insider ownership. Goodman Group insiders own about AU$88m worth of shares. That equates to 0.3% of the company. 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 Goodman Group Insider Transactions Indicate?

There haven't been any insider transactions in the last three months -- that doesn't mean much. We don't take much encouragement from the transactions by Goodman Group insiders. But it's good to see that insiders own shares in the company. 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.

But note: Goodman Group 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 aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.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.