Gamma Communications plc (LON:GAMA) is down 5.0% in the last week, but insiders who sold £55,000 worth of shares over the past year have had less success. Given that the average selling price of £10.93 is still below the current share price, insiders would probably have been better off sticking with their shares.
While we would never suggest that investors base their decisions solely on what a company’s directors have done, we would think it foolish to ignore insider transactions entirely.
Our analysis indicates this GAMA is potentially underrated!
Gamma Communications insider transactions over the past year
Interim CEO and executive director, Andrew Scott Belshaw, made the largest insider sale in the past 12 months. This single transaction involved £55,000 worth of shares priced at £10.93 each. This means that even when the share price was slightly below the current price of UK£11.00, an insider wanted to redeem some shares. We generally view it negatively when insiders have sold, particularly if they have sold below the current price, as this implies that they believed a lower price was appropriate. While insider selling isn’t a positive sign, we can’t be sure that insiders believe the shares are fully valued, so it’s just a weak sign. It’s worth noting that this sale represented just 5.0% of Andrew Scott Belshaw’s stake. Andrew Scott Belshaw was the only single insider to sell shares in the past 12 months.
Insiders bought 2.49,000 shares for £32,000 in the last 12 months. But insiders sold 5,000 shares worth UK£55,000. Below is a visual representation of insider transactions (both corporate and individual) over the past 12 months. If you want to know exactly who sold how much and when, just click on the graphic below!
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Gamma Communications insiders are selling the stock
Over the past three months, we have seen significant insider selling at Gamma Communications. In total, interim CEO and Executive Director Andrew Scott Belshaw sold £55,000 worth of shares during that time and we did not see any purchases. Given that, it’s hard to argue that all insiders think the shares are a steal.
Looking at the total number of insider holdings in a company can help inform your opinion of whether they are well aligned with common shareholders. Typically, the higher the insider ownership, the more likely it is that insiders will be incentivized to build the company over the long term. Based on our data, Gamma Communications insiders own around 0.2% of the shares, worth around £2.5m. However, it is possible that insiders could have an indirect interest through a more complex structure. We prefer to see a high level of inside ownership.
What could the insider transactions at Gamma Communications tell us?
An insider hasn’t bought any stock of Gamma Communications for the past three months, but there have been some sales. Despite some insider buying, the longer-term picture doesn’t make us much more positive. When you combine that with relatively little insider ownership, we’re very cautious about the stock. So we are not in a hurry with the purchase, to say the least. So while it’s helpful to know what insiders are doing in relation to the purchase or sale, it’s also helpful to know the risks a particular company faces. Regarding investment risks We have identified 1 warning sign with and understanding Gamma Communications should be part of your investment process.
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For the purposes of this article, insiders are individuals who report their transactions to the relevant regulator. We currently account for open market transactions and private dispositions, but not derivatives transactions.
The assessment is complex, but we help to simplify it.
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