Insiders At Techtronic Industries Sold US$95m In Stock, Alluding To Potential Weakness
Over the past year, many Techtronic Industries Company Limited (HKG:669) insiders sold a significant stake in the company which may have piqued investors' interest. Knowing whether insiders are buying is usually more helpful when evaluating insider transactions, as insider selling can have various explanations. However, if numerous insiders are selling, shareholders should investigate more.
While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we would consider it foolish to ignore insider transactions altogether.
The Last 12 Months Of Insider Transactions At Techtronic Industries
The CEO & Executive Director, Steven Philip Richman, made the biggest insider sale in the last 12 months. That single transaction was for HK$32m worth of shares at a price of HK$99.36 each. That means that an insider was selling shares at slightly below the current price (HK$128). We generally consider it a negative if insiders have been selling, especially if they did so below the current price, because it implies that they considered a lower price to be reasonable. 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 sale was 54% of Steven Philip Richman's stake.
Over the last year we saw more insider selling of Techtronic Industries shares, than buying. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. By clicking on the graph below, you can see the precise details of each insider transaction!
View our latest analysis for Techtronic Industries
I will like Techtronic Industries 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.
Techtronic Industries Insiders Are Selling The Stock
The last quarter saw substantial insider selling of Techtronic Industries shares. Specifically, CEO & Executive Director Steven Philip Richman ditched HK$18m 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.
Does Techtronic Industries Boast High Insider Ownership?
For a common shareholder, it is worth checking how many shares are held by company insiders. We usually like to see fairly high levels of insider ownership. It's great to see that Techtronic Industries insiders own 22% of the company, worth about HK$52b. Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.
So What Does This Data Suggest About Techtronic Industries Insiders?
An insider sold stock recently, but they haven't been buying. And our longer term analysis of insider transactions didn't bring confidence, either. On the plus side, Techtronic Industries makes money, and is growing profits. While insiders do own a lot of shares in the company (which is good), our analysis of their transactions doesn't make us feel confident about the company. So while it's helpful to know what insiders are doing in terms of buying or selling, it's also helpful to know the risks that a particular company is facing. While conducting our analysis, we found that Techtronic Industries has 1 warning sign and it would be unwise to ignore it.
But note: Techtronic Industries 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 of direct interests only, but not derivative transactions or indirect interests.
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