It is not uncommon to see companies perform well in the years after insiders buy shares. 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 before you buy or sell Tomra Systems ASA (OB:TOM), you may well want to know whether insiders have been buying or selling.
What Is Insider Selling?
It’s quite normal to see company insiders, such as board members, trading in company stock, from time to time. 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.’
View our latest analysis for Tomra Systems
The Last 12 Months Of Insider Transactions At Tomra Systems
Over the last year, we can see that the biggest insider sale was by the Executive VP, Volker Rehrmann, for kr3.1m worth of shares, at about kr261 per share. That means that an insider was selling shares at around the current price of kr256. While we don’t usually like to see insider selling, it’s more concerning if the sales take place at a lower price. Given that the sale took place at around current prices, it makes us a little cautious but is hardly a major concern. Volker Rehrmann was the only individual insider to sell over the last year.
In the last twelve months insiders purchased 9386 shares for kr2.5m. But insiders sold 12000 shares worth kr3.1m. You can see a visual depiction of insider transactions (by individuals) over the last 12 months, below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
Insiders at Tomra Systems Have Sold Stock Recently
Over the last three months, we’ve seen notably more insider selling, than insider buying, at Tomra Systems. We note Volker Rehrmann cashed in kr3.1m worth of shares. On the other hand we note insiders bought kr2.3m worth of shares. Generally this level of net selling might be considered a bit bearish.
Insider Ownership of Tomra Systems
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. We usually like to see fairly high levels of insider ownership. Tomra Systems insiders own about kr112m worth of shares. That equates to 0.3% 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 Tomra Systems Tell Us?
The insider sales have outweighed the insider buying, at Tomra Systems, in the last three months. And our longer term analysis of insider transactions didn’t bring confidence, either. But since Tomra Systems is profitable and growing, we’re not too worried by this. 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. Of course, the future is what matters most. So if you are interested in Tomra Systems, 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.
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.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.