Over the last year, a good number of insiders have significantly increased their holdings in Geo Limited (NZSE:GEO). This is encouraging because it indicates that insiders are more optimistic about the company's prospects.
While insider transactions are not the most important thing when it comes to long-term investing, logic dictates you should pay some attention to whether insiders are buying or selling shares.
Check out our latest analysis for Geo
Geo Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider purchase was by insider Aaron Bhatnagar for NZ$1.5m worth of shares, at about NZ$0.13 per share. So it's clear an insider wanted to buy, even at a higher price than the current share price (being NZ$0.071). 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. In our view, the price an insider pays for shares is very important. As a general rule, we feel more positive about a stock if insiders have bought shares at above current prices, because that suggests they viewed the stock as good value, even at a higher price.
While Geo insiders bought shares during the last year, they didn't sell. The chart below shows insider transactions (by companies and individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
Geo is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Does Geo Boast High Insider Ownership?
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. Insiders own 16% of Geo shares, worth about NZ$2.1m. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.
So What Does This Data Suggest About Geo Insiders?
It doesn't really mean much that no insider has traded Geo shares in the last quarter. But insiders have shown more of an appetite for the stock, over the last year. Insiders do have a stake in Geo and their transactions don't cause us concern. While we like knowing what's going on with the insider's ownership and transactions, we make sure to also consider what risks are facing a stock before making any investment decision. Case in point: We've spotted 4 warning signs for Geo you should be aware of, and 2 of these make us uncomfortable.