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We often see insiders buying up shares in companies that perform well over the long term. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So before you buy or sell Gale Pacific Limited (ASX:GAP), you may well want to know whether insiders have been buying or selling.
What Is Insider Selling?
Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock in the company. However, rules govern insider transactions, and certain disclosures are required.
We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. But equally, we would consider it foolish to ignore insider transactions altogether. 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'.
See our latest analysis for Gale Pacific
Gale Pacific Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider purchase was by Non Executive Chairman David Allman for AU$116k worth of shares, at about AU$0.13 per share. We do like to see buying, but this purchase was made at well below the current price of AU$0.36. Because the shares were purchased at a lower price, this particular buy doesn't tell us much about how insiders feel about the current share price.
While Gale Pacific insiders bought shares during the last year, they didn't sell. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of growing companies that insiders are buying.
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. Insiders own 5.9% of Gale Pacific shares, worth about AU$5.8m, according to our data. We do note, however, it is possible insiders have an indirect interest through a private company or other corporate structure. We do generally prefer see higher levels of insider ownership.
So What Do The Gale Pacific Insider Transactions Indicate?
It doesn't really mean much that no insider has traded Gale Pacific shares in the last quarter. On a brighter note, the transactions over the last year are encouraging. The transactions are fine but it'd be more encouraging if Gale Pacific insiders bought more shares in the company. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Gale Pacific. At Simply Wall St, we've found that Gale Pacific has 6 warning signs (2 are a bit unpleasant!) that deserve your attention before going any further with your analysis.