Who Has Been Selling Tecsys Inc. (TSE:TCS) Shares?

By
Simply Wall St
Published
April 05, 2021
TSX:TCS
Source: Shutterstock

We often see insiders buying up shares in companies that perform well over the long term. 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 Tecsys Inc. (TSE:TCS), 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 in the company. However, most countries require that the company discloses such transactions to the market.

We don't think shareholders should simply follow insider transactions. 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'.

See our latest analysis for Tecsys

Tecsys Insider Transactions Over The Last Year

The Executive Chairman, David Brereton, made the biggest insider sale in the last 12 months. That single transaction was for CA$7.9m worth of shares at a price of CA$47.83 each. So what is clear is that an insider saw fit to sell at around the current price of CA$43.65. We generally don't like to see insider selling, but the lower the sale price, the more it concerns us. Given that the sale took place at around current prices, it makes us a little cautious but is hardly a major concern.

In total, Tecsys insiders sold more than they bought over the last year. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

insider-trading-volume
TSX:TCS Insider Trading Volume April 5th 2021

For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

Tecsys Insiders Are Selling The Stock

The last quarter saw substantial insider selling of Tecsys shares. In total, insiders dumped CA$1.4m worth of shares in that time, and we didn't record any purchases whatsoever. This may suggest that some insiders think that the shares are not cheap.

Does Tecsys Boast High Insider Ownership?

Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. We usually like to see fairly high levels of insider ownership. Tecsys insiders own about CA$134m worth of shares (which is 21% of the company). I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.

So What Does This Data Suggest About Tecsys Insiders?

Insiders sold Tecsys shares recently, but they didn't buy any. Zooming out, the longer term picture doesn't give us much comfort. On the plus side, Tecsys 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 these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. Case in point: We've spotted 3 warning signs for Tecsys you should be aware of.

But note: Tecsys 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, but not derivative transactions.

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