Global

Dissecting the Insider Trading Patterns of The Gap, Inc. (GPS)

Recent insider trends for The Gap, Inc. (NYSE:GPS) have caught the attention of investors. Analysts study insider data to get a sense of sense of what key shareholders think about the outlook for a particular stock. In the case of GPS, the data has some interesting implications for where the stock might be headed.

Institutions own 56.91% of The Gap, Inc. (GPS)’s shares. The total value of these holdings, in millions, is $6,077. Among active positions in the latest quarter, 220 holders increased their positions by a total of 22.71 million shares, 218 holders decreased the positions by a total of 23.65 million shares, and 62 holders held their positions. This works out to a net decrease in ownership of 941872 shares, and suggests that institutions are feeling bearish about the stock.

Among new and sold out positions, 56 holders initiated new positions by a total of 5.09 million shares and 50 holders exited their positions by a total of 5.02 million shares. This nets out to an increase of 69795 shares and is a bullish sign for GPS.

In the last three months, insiders executed a total of 9 trades. 9 were sells. Insider ownership decreased by a total of 678109 shares, which suggests that GPS’s key executives are feeling less optimistic about the outlook for the stock. The data from the past twelve months tells a similar story: insiders executed 39 sells, and ownership decreased by a net of 82.32 million shares.



The analysis of insider buying and selling trends can be extended to the aggregate level. Short interest, which represents the number of a stock’s shares currently being shorted, captures what the market as a whole feels about a stock. The Gap, Inc. (NYSE:GPS)’s short interest is 29.15 million shares, or 10.82% of the float. This represents an increase of 27% in the number of shares being shorted compared to the previous reading, and implies that investors felt more pessimistic about the stock during the past two weeks.

In light of the insider ownership and trading data it makes sense to consider technicals to see if they come to a similar conclusion about the outlook for GPS. A composite of 13 technical indicators that includes measures such as moving averages and momentum oscillators suggests that GPS is a Weak buy, which implies that GPS is expected to outperform the market based on prior trading patterns.

Conclusion




Institutional ownership trends suggest that the stock is cheap and the insider trading data indicates that insiders are bearish. Technical indicators (also) suggest that The Gap, Inc. (NYSE:GPS) is undervalued.

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