Need To Know: TransCanada Corporation (TSE:TRP) Insiders Have Been Buying Shares

By
Simply Wall St
Published
December 10, 2018
TSX:TRP
Source: Shutterstock

We've lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So we'll take a look at whether insiders have been buying or selling shares in TransCanada Corporation (TSE:TRP).

Do Insider Transactions Matter?

It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. 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. As Peter Lynch said, 'insiders might sell their shares for any number of reasons, but they buy them for only one: they think the price will rise.'

Check out our latest analysis for TransCanada

TransCanada Insider Transactions Over The Last Year

In the last twelve months, the biggest single sale by an insider was when Executive VP & CFO Donald Marchand sold CA$1.7m worth of shares at a price of CA$58.50 per share. So we know that an insider sold shares at around the present share price of CA$53.54. While their view may have changed since the sale, this is not a particularly positive fact. We generally tread carefully if insiders have been selling on market, even if they sold slightly above the current price.

Happily, we note that in the last year insiders paid CA$2.1m for 38.19k shares. On the other hand they divested 32.85k shares, for CA$1.9m. In the last twelve months there was more buying than selling by TransCanada insiders. The average buy price was around CA$53.87. This is nice to see since it implies that insiders might see value around current prices (around CA$53.54). The chart below shows insider transactions over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!

TSX:TRP Insider Trading December 10th 18
TSX:TRP Insider Trading December 10th 18

If you like to buy stocks alongside management, then you might just love this freelist of companies. (Hint: insiders have been buying them).

TransCanada Insiders Bought Stock Recently

Over the last three months, we've seen significantly more insider buying, than insider selling, at TransCanada. In total, 3 insiders bought CA$332k worth of shares in that time. But insiders only sold shares worth CA$22k. We think insiders may be optimistic about the future, since insiders have been net buyers of shares.

Does TransCanada Boast High Insider Ownership?

Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. A high insider ownership often makes company leadership more mindful of shareholder interests. It's good to see that TransCanada insiders own 0.1% of the company, worth about CA$40m. We've certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.

So What Do The TransCanada Insider Transactions Indicate?

It's certainly positive to see the recent insider purchases. And an analysis of the transactions over the last year also gives us confidence. While the overall levels of insider ownership are below what we'd like to see, the history of transactions imply that TransCanada insiders are reasonably well aligned, and optimistic for the future. Of course, the future is what matters most. So if you are interested in TransCanada, you should check out this freereport 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 freelist 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 editorial-team@simplywallst.com.

Simply Wall St analyst Simply Wall St and Simply Wall St have no position in any of the companies mentioned. This article 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.

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