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We often see insiders buying up shares in companies that perform well over the long term. The flip side of that is that there are more than a few examples of insiders dumping stock prior to a period of weak performance. So we'll take a look at whether insiders have been buying or selling shares in Gaming Realms plc (LON:GMR).
Do Insider Transactions Matter?
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, such insiders must disclose their trading activities, and not trade on inside information.
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 Harvard University study found that 'insider purchases earn abnormal returns of more than 6% per year'.
View our latest analysis for Gaming Realms
The Last 12 Months Of Insider Transactions At Gaming Realms
The Independent Non Executive Director Mark Blandford made the biggest insider purchase in the last 12 months. That single transaction was for UK£400k worth of shares at a price of UK£0.08 each. Even though the purchase was made at a significantly lower price than the recent price (UK£0.15), we still think insider buying is a positive. Because it occurred at a lower valuation, it doesn't tell us much about whether insiders might find today's price attractive.
In the last twelve months Gaming Realms insiders were buying shares, but not selling. 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!
Gaming Realms is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Does Gaming Realms Boast High Insider Ownership?
Many investors like to check how much of a company is owned by insiders. We usually like to see fairly high levels of insider ownership. It appears that Gaming Realms insiders own 26% of the company, worth about UK£12m. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.
What Might The Insider Transactions At Gaming Realms Tell Us?
It doesn't really mean much that no insider has traded Gaming Realms shares in the last quarter. But insiders have shown more of an appetite for the stock, over the last year. Overall we don't see anything to make us think Gaming Realms insiders are doubting the company, and they do own shares. 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 3 warning signs for Gaming Realms you should be aware of, and 1 of them is potentially serious.