Stock Analysis

Read This Before Selling TransAlta Corporation (TSE:TA) Shares

Source: Shutterstock

We often see insiders buying up shares in companies that perform well over the long term. The flip side of that is that there are more than a few examples of insiders dumping stock prior to a period of weak performance. So we'll take a look at whether insiders have been buying or selling shares in TransAlta Corporation (TSE:TA).

What Is Insider Buying?

It's quite normal to see company insiders, such as board members, trading in company stock, from time to time. 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. 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.

See our latest analysis for TransAlta

The Last 12 Months Of Insider Transactions At TransAlta

Over the last year, we can see that the biggest insider purchase was by President Dawn Farrell for CA$501k worth of shares, at about CA$10.03 per share. That means that an insider was happy to buy shares at above the current price of CA$8.70. While their view may have changed since the purchase was made, this does at least suggest they have had confidence in the company's future. In our view, the price an insider pays for shares is very important. Generally speaking, it catches our eye when insiders have purchased shares at above current prices, as it suggests they believed the shares were worth buying, even at a higher price.

Over the last year, we can see that insiders have bought 143709 shares worth CA$1.1m. But insiders sold 25780 shares worth CA$191k. Overall, TransAlta insiders were net buyers last year. They paid about CA$7.74 on average. These transactions show that insiders have confidence to invest their own money in the stock, albeit at slightly below the recent price. 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!

TSX:TA Recent Insider Trading, October 2nd 2019
TSX:TA Recent Insider Trading, October 2nd 2019

TransAlta is not the only stock that insiders are buying. For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

TransAlta Insiders Bought Stock Recently

There was some insider buying at TransAlta over the last quarter. In that period COO & Chief Growth Officer John Kousinioris spent CA$75k on shares. On the other hand, COO & Chief Growth Officer John Kousinioris sold CA$49k worth of shares. It is good to see that insiders have been buying, but they did not buy very many shares, in the scheme of things.

Insider Ownership of TransAlta

Many investors like to check how much of a company is owned by insiders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Based on our data, TransAlta insiders have about 0.3% of the stock, worth approximately CA$6.3m. We prefer to see high levels of insider ownership.

So What Does This Data Suggest About TransAlta Insiders?

We note a that there has been a bit of insider buying recently (but no selling). The net investment is not enough to encourage us much. On a brighter note, the transactions over the last year are encouraging. We'd like to see bigger individual holdings. However, we don't see anything to make us think TransAlta insiders are doubting the company. Of course, the future is what matters most. So if you are interested in TransAlta, you should check out this free report on analyst forecasts for the company.

Of course TransAlta may not be the best stock to buy. So you may wish to see this free collection of high quality companies.

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 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.