General Dynamics Insiders Sell US$23m Of Stock, Possibly Signalling Caution

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General Dynamics Insiders Sell US$23m Of Stock, Possibly Signalling Caution

The fact that multiple General Dynamics Corporation (NYSE:GD) insiders offloaded a considerable amount of shares over the past year could have raised some eyebrows amongst investors. When evaluating insider transactions, knowing whether insiders are buying is usually more beneficial than knowing whether they are selling, as the latter can be open to many interpretations. However, when multiple insiders sell stock over a specific duration, shareholders should take notice as that could possibly be a red flag.

While insider transactions are not the most important thing when it comes to long-term investing, we do think it is perfectly logical to keep tabs on what insiders are doing.

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The Last 12 Months Of Insider Transactions At General Dynamics

In the last twelve months, the biggest single ***** by an insider was when the Chairperson & CEO, Phebe Novakovic, sold US$14m worth of shares at a price of US$285 per share. That means that even when the share price was below the current price of US$301, an insider wanted to cash in some shares. 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. While insider selling is not a positive sign, we can’t be sure if it does mean insiders think the shares are fully valued, so it’s only a weak sign. This single ***** was just 5.8% of Phebe Novakovic’s stake.

In the last year General Dynamics insiders didn’t buy any company stock. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

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insider-trading-volume

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Does General Dynamics Boast High Insider Ownership?

Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. I reckon it’s a good sign if insiders own a significant number of shares in the company. It’s great to see that General Dynamics insiders own 0.6% of the company, worth about US$512m. I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.

What Might The Insider Transactions At General Dynamics Tell Us?

The fact that there have been no General Dynamics insider transactions recently certainly doesn’t bother us. While we feel good about high insider ownership of General Dynamics, we can’t say the same about the selling of shares. Therefore, you should definitely take a look at this FREE

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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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.

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