We've lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So shareholders might well want to know whether insiders have been buying or selling shares in GlaxoSmithKline plc (LON:GSK).
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 in the company. However, rules govern insider transactions, and certain disclosures are required.
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'.
GlaxoSmithKline Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider sale was by the CEO & Director, Emma Walmsley, for UK£1.0m worth of shares, at about UK£15.85 per share. So it's clear an insider wanted to take some cash off the table, even below the current price of UK£17.37. 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. However, while insider selling is sometimes discouraging, it's only a weak signal. It is worth noting that this sale was only 13% of Emma Walmsley's holding.
Over the last year, we can see that insiders have bought 4175.47 shares worth UK£69k. But they sold 121695 for UK£1.9m. In total, GlaxoSmithKline insiders sold more than they bought over the last year. The chart below shows insider transactions (by individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!
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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. It appears that GlaxoSmithKline insiders own 0.03% of the company, worth about UK£27m. While this is a strong but not outstanding level of insider ownership, it's enough to indicate some alignment between management and smaller shareholders.
So What Does This Data Suggest About GlaxoSmithKline Insiders?
It doesn't really mean much that no insider has traded GlaxoSmithKline shares in the last quarter. Still, the insider transactions at GlaxoSmithKline in the last 12 months are not very heartening. But it's good to see that insiders own shares in the company. Therefore, you should should definitely take a look at this FREE report showing analyst forecasts for GlaxoSmithKline.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.
For the purposes of this article, insiders are those individuals who report their transactions to the relevant regulatory body. We currently account for open market transactions and private dispositions, but not derivative transactions.
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