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Having purchased US$10.0m worth of Gen Digital Inc. (NASDAQ:GEN) stock, the recent 14% pullback is not what insiders may have expected

The recent price decline of 14% in Gen Digital Inc.'s (NASDAQ:GEN) stock may have disappointed insiders who bought US$10.0m worth of shares at an average price of US$21.91 in the past 12 months. Insiders buy with the expectation to see their investments rise in value over a period of time. However, recent losses have rendered their above investment worth US$7.6m which is not ideal.

Although we don't think shareholders should simply follow insider transactions, logic dictates you should pay some attention to whether insiders are buying or selling shares.

See our latest analysis for Gen Digital

The Last 12 Months Of Insider Transactions At Gen Digital

In the last twelve months, the biggest single purchase by an insider was when President & Director Ondrej Vlcek bought US$10.0m worth of shares at a price of US$21.91 per share. So it's clear an insider wanted to buy, even at a higher price than the current share price (being US$16.61). Their view may have changed since then, but at least it shows they felt optimistic at the time. In our view, the price an insider pays for shares is very important. It is encouraging to see an insider paid above the current price for shares, as it suggests they saw value, even at higher levels. The only individual insider to buy over the last year was Ondrej Vlcek.

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!

insider-trading-volume
insider-trading-volume

There are always plenty of stocks that insiders are buying. So if that suits your style you could check each stock one by one or you could take a look at this free list of companies. (Hint: insiders have been buying them).

Gen Digital Insiders Are Selling The Stock

Over the last three months, we've seen a bit of insider selling at Gen Digital. EVP, CFO & Principal Accounting Officer Natalie Derse only netted US$22k selling shares, in that period. Neither the lack of buying nor the presence of selling is heartening. But the selling simply isn't sufficiently substantial to be of much use as a signal.

Does Gen Digital Boast High Insider Ownership?

Many investors like to check how much of a company is owned by insiders. I reckon it's a good sign if insiders own a significant number of shares in the company. Gen Digital insiders own 8.7% of the company, currently worth about US$922m based on the recent share price. I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.

So What Does This Data Suggest About Gen Digital Insiders?

We did not see any insider buying in the last three months, but we did see selling. But given the selling was modest, we're not worried. However, our analysis of transactions over the last year is heartening. Judging from their transactions, and high insider ownership, Gen Digital insiders feel good about the company's future. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. At Simply Wall St, we've found that Gen Digital has 5 warning signs (1 makes us a bit uncomfortable!) that deserve your attention before going any further with your analysis.

But note: Gen Digital may not be the best stock to buy. So take a peek at this free list of interesting companies with high ROE and low debt.

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.

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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