From what we can see, insiders were net sellers in Genworth Financial, Inc.'s (NYSE:GNW ) during the past 12 months. That is, insiders sold the stock in greater numbers than they purchased it.
While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, logic dictates you should pay some attention to whether insiders are buying or selling shares.
See our latest analysis for Genworth Financial
Over the last year, we can see that the biggest insider sale was by the President, Thomas McInerney, for US$1.3m worth of shares, at about US$6.27 per share. So it's clear an insider wanted to take some cash off the table, even below the current price of US$7.00. As a general rule we consider it to be discouraging when insiders are selling below the current price, because it suggests they were happy with a lower valuation. However, while insider selling is sometimes discouraging, it's only a weak signal. It is worth noting that this sale was only 3.7% of Thomas McInerney's holding. The only individual insider seller over the last year was Thomas McInerney.
Thomas McInerney divested 350.00k shares over the last 12 months at an average price of US$6.53. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
For those who like to find hidden gems this free list of small cap companies with recent insider purchasing, could be just the ticket.
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Insiders own 1.9% of Genworth Financial shares, worth about US$58m. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.
There haven't been any insider transactions in the last three months -- that doesn't mean much. We don't take much encouragement from the transactions by Genworth Financial insiders. But it's good to see that insiders own shares in the company. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. When we did our research, we found 2 warning signs for Genworth Financial (1 is significant!) that we believe deserve your full attention.
Of course Genworth Financial may not be the best stock to buy. So you may wish to see this free collection of high quality 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 of direct interests only, but not derivative transactions or indirect interests.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.