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It is not uncommon to see companies perform well in the years after insiders buy shares. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So we’ll take a look at whether insiders have been buying or selling shares in GTT Communications, Inc. (NYSE:GTT).
What Is Insider Selling?
It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, most countries require that the company discloses such transactions to the market.
We don’t think shareholders should simply follow insider transactions. 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’.
The Last 12 Months Of Insider Transactions At GTT Communications
In the last twelve months, the biggest single purchase by an insider was when Independent Director Elizabeth Satin bought US$205k worth of shares at a price of US$51.22 per share. That means that an insider was happy to buy shares at above the current price. While their view may have changed since the purchase was made, this does at least suggest they have had confidence in the company’s future. That purchase may suggest an expectation of positive returns over the long term.
Over the last year, we can see that insiders have bought 18.40k shares worth US$875k. But insiders sold 19.80k shares worth US$601k. Overall, GTT Communications insiders were net buyers last year. Their average price was about US$47.58. These transactions suggest that insiders have considered the current price of US$30.60 attractive. The chart below shows insider transactions (by individuals) over the last year. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.
GTT Communications Insiders Are Selling The Stock
Over the last three months, we’ve seen significant insider selling at GTT Communications. In total, insiders dumped US$442k 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.
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. We usually like to see fairly high levels of insider ownership. It’s great to see that GTT Communications insiders own 8.0% of the company, worth about US$134m. Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.
So What Does This Data Suggest About GTT Communications Insiders?
Insiders sold GTT Communications shares recently, but they didn’t buy any. But we take heart from prior transactions. On top of that, insiders own a significant portion of the company. So the recent selling doesn’t worry us. Therefore, you should should definitely take a look at this FREE report showing analyst forecasts for GTT Communications.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.
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 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.