Over the last year, a good number of insiders have significantly increased their holdings in General Electric Company (NYSE:GE). This is encouraging because it indicates that insiders are more optimistic about the company’s prospects.
Although we don’t think shareholders should simply follow insider transactions, we would consider it foolish to ignore insider transactions altogether.
General Electric Insider Transactions Over The Last Year
In the last twelve months, the biggest single purchase by an insider was when Chairman & CEO H. Culp bought US$4.8m worth of shares at a price of US$75.26 per share. So it’s clear an insider wanted to buy, even at a higher price than the current share price (being US$64.55). 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.
Over the last year, we can see that insiders have bought 75.54k shares worth US$5.7m. On the other hand they divested 1.44k shares, for US$107k. In the last twelve months there was more buying than selling by General Electric insiders. 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!
There are always plenty of stocks that insiders are buying. So if that suits your style you could check each stock one by one or you could take a look at this free list of companies. (Hint: insiders have been buying them).
Insider Ownership Of General Electric
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. A high insider ownership often makes company leadership more mindful of shareholder interests. It’s great to see that General Electric insiders own 0.2% of the company, worth about US$172m. 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 Do The General Electric Insider Transactions Indicate?
The fact that there have been no General Electric insider transactions recently certainly doesn’t bother us. However, our analysis of transactions over the last year is heartening. Judging from their transactions, and high insider ownership, General Electric insiders feel good about the company’s future. Of course, the future is what matters most. So if you are interested in General Electric, you should check out this free report on analyst forecasts for the company.
If you would prefer to check out another company — one with potentially superior financials — then do not miss this free list of interesting companies, that have HIGH return on equity and low debt.News Source: Yahoo Finance