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It is not uncommon to see companies perform well in the years after insiders buy shares. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So before you buy or sell Toromont Industries Ltd. (TSE:TIH), you may well want to know whether insiders have been buying or selling.
Do Insider Transactions Matter?
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, rules govern insider transactions, and certain disclosures are required.
Insider transactions are not the most important thing when it comes to long-term investing. But logic dictates you should pay some attention to whether insiders are buying or selling shares. For example, a Harvard University study found that ‘insider purchases earn abnormal returns of more than 6% per year.’
Check out our latest analysis for Toromont Industries
The Last 12 Months Of Insider Transactions At Toromont Industries
The Chairman, Robert Ogilvie, made the biggest insider sale in the last 12 months. That single transaction was for CA$1.3m worth of shares at a price of CA$69.00 each. So we know that an insider sold shares at around the present share price of CA$59.75. We generally don’t like to see insider selling, but the lower the sale price, the more it concerns us. We note that this sale took place at around the current price, so it isn’t a major concern, though it’s hardly a good sign.
In the last twelve months insiders purchased 7819 shares for CA$498k. But they sold 31163 for CA$2.1m. All up, insiders sold more shares in Toromont Industries than they bought, over the last year. 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!
For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.
Toromont Industries Insiders Bought Stock Recently
Over the last three months, we’ve seen significant insider buying at Toromont Industries. In total, insiders bought CA$82k worth of shares in that time, and we didn’t record any sales whatsoever. That shows some optimism about the company’s future.
Insider Ownership
Many investors like to check how much of a company is owned by insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. Toromont Industries insiders own 3.3% of the company, currently worth about CA$161m based on the recent share price. 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 Toromont Industries Insiders?
It’s certainly positive to see the recent insider purchases. However, the longer term transactions are not so encouraging. Overall, we’d prefer see a more sustained buying from directors, but with a significant insider holding and more recent purchases, Toromont Industries insiders are reasonably well aligned, and optimistic for the future. If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its future.
Of course Toromont Industries may not be the best stock to buy. So you may wish to see this free collection of high quality companies.
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.