We often see insiders buying up shares in companies that perform well over the long term. On the other hand, we’d be remiss not to mention that insider sales have been known to precede tough periods for a business. So we’ll take a look at whether insiders have been buying or selling shares in Transurban Group (ASX:TCL).
What Is Insider Buying?
Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock on the market. 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 it is perfectly logical to keep tabs on what insiders are doing. For example, a Harvard University study found that ‘insider purchases earn abnormal returns of more than 6% per year.’
The Last 12 Months Of Insider Transactions At Transurban Group
Over the last year, we can see that the biggest insider sale was by CEO & Executive Director Scott Charlton for AU$4.0m worth of shares, at about AU$11.53 per share. That means that an insider was selling shares at below the current price (AU$11.59). While their view may have changed since they sold, this isn’t a particularly bullish sign. As a general rule we consider it to be discouraging when insiders are selling below the current price. We note that the biggest single sale was only 20.8% of Scott Charlton’s holding. Scott Charlton was the only individual insider to sell over the last year. Notably Scott Charlton was also the biggest buyer, having purchased AU$6.1m worth of shares.
Over the last year, we can see that insiders have bought 552.41k shares worth AU$6.1m. But they sold 350.00k for AU$4.0m. Overall, Transurban Group insiders were net buyers last year. They paid about AU$11.01 on average. It’s great to see insiders putting their own cash into the company’s stock, albeit at below the recent share price (AU$11.59). The chart below shows insider transactions (by individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.
Does Transurban Group Boast High Insider Ownership?
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. Transurban Group insiders own about AU$36m worth of shares. That equates to 0.1% of the company. 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 Transurban Group Tell Us?
It doesn’t really mean much that no insider has traded Transurban Group 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 Transurban Group insiders are doubting the company, and they do own shares. Of course, the future is what matters most. So if you are interested in Transurban Group, you should check out this free report on analyst forecasts for the company.
If you would prefer to check out another company — one with potentially superior financials — then do not miss this free list of interesting companies, that have HIGH return on equity and low debt.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at email@example.com.