Have Insiders Been Buying TransAlta Corporation (TSE:TA) Shares This Year?

By
Simply Wall St
Published
February 02, 2021
TSX:TA
Source: Shutterstock

We've lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. 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 we'll take a look at whether insiders have been buying or selling shares in TransAlta Corporation (TSE:TA).

Do Insider Transactions Matter?

It is perfectly legal for company insiders, including board members, to buy and sell stock in a 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 equally, we would consider it foolish to ignore insider transactions altogether. 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 TransAlta

TransAlta Insider Transactions Over The Last Year

The President Dawn Farrell made the biggest insider purchase in the last 12 months. That single transaction was for CA$2.0m worth of shares at a price of CA$7.97 each. Even though the purchase was made at a significantly lower price than the recent price (CA$11.57), we still think insider buying is a positive. While it does suggest insiders consider the stock undervalued at lower prices, this transaction doesn't tell us much about what they think of current prices.

In the last twelve months insiders purchased 735.98k shares for CA$5.9m. But insiders sold 137.32k shares worth CA$1.3m. Overall, TransAlta insiders were net buyers during the last year. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. By clicking on the graph below, you can see the precise details of each insider transaction!

insider-trading-volume
TSX:TA Insider Trading Volume February 2nd 2021

TransAlta is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.

TransAlta Insiders Are Selling The Stock

The last quarter saw substantial insider selling of TransAlta shares. Specifically, insiders ditched CA$1.3m worth of shares in that time, and we didn't record any purchases whatsoever. Overall this makes us a bit cautious, but it's not the be all and end all.

Does TransAlta Boast High Insider Ownership?

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. It appears that TransAlta insiders own 0.5% of the company, worth about CA$14m. 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 Does This Data Suggest About TransAlta Insiders?

Insiders sold stock recently, but they haven't been buying. In contrast, they appear keener if you look at the last twelve months. It's good to see insiders are shareholders. So the recent selling doesn't worry us too much. While we like knowing what's going on with the insider's ownership and transactions, we make sure to also consider what risks are facing a stock before making any investment decision. You'd be interested to know, that we found 2 warning signs for TransAlta and we suggest you have a look.

But note: TransAlta 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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