Over the past year, many TORM plc (CPH:TRMD A) insiders sold a significant stake in the company which may have piqued investors' interest. 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, if numerous insiders are selling, shareholders should investigate more.
Although we don't think shareholders should simply follow insider transactions, we do think it is perfectly logical to keep tabs on what insiders are doing.
The CEO & Executive Director, Jacob Meldgaard, made the biggest insider sale in the last 12 months. That single transaction was for kr.17m worth of shares at a price of kr.128 each. So it's clear an insider wanted to take some cash off the table, even below the current price of kr.133. 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. This single sale was 100% of Jacob Meldgaard's stake.
Insiders in TORM didn't buy any shares in the last year. 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!
See our latest analysis for TORM
I will like TORM better if I see some big insider buys. While we wait, check out this free list of undervalued and small cap stocks with considerable, recent, insider buying.
Over the last three months, we've seen significant insider selling at TORM. Specifically, CEO & Executive Director Jacob Meldgaard ditched kr.17m worth of shares in that time, and we didn't record any purchases whatsoever. In light of this it's hard to argue that all the insiders think that the shares are a bargain.
I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. From what we can see in our data, insiders own only about kr.3.5m worth of TORM shares. It's always possible we are missing something but from our data, it looks like insider ownership is minimal.
An insider sold stock recently, but they haven't been buying. Looking to the last twelve months, our data doesn't show any insider buying. When you consider that most companies have higher levels of insider ownership, we're a little wary. So we're not rushing to buy, to say the least. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing TORM. To that end, you should learn about the 4 warning signs we've spotted with TORM (including 1 which doesn't sit too well with us).
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.
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.