TORM Insiders Sell US$110m Of Stock, Possibly Signalling Caution

Many TORM plc (CPH:TRMD A) insiders ditched their stock over the past year, which may be of interest to the company's shareholders. Knowing whether insiders are buying is usually more helpful when evaluating insider transactions, as insider selling can have various explanations. However, shareholders should take a deeper look if several insiders are selling stock over a specific time period.

Although we don't think shareholders should simply follow insider transactions, logic dictates you should pay some attention to whether insiders are buying or selling shares.

See our latest analysis for TORM

The Last 12 Months Of Insider Transactions At TORM

Over the last year, we can see that the biggest insider sale was by the CEO & Executive Director, Jacob Meldgaard, for kr.108m worth of shares, at about kr.215 per share. So it's clear an insider wanted to take some cash off the table, even below the current price of kr.228. We generally consider it a negative if insiders have been selling, especially if they did so below the current price, because it implies that they considered a lower price to be reasonable. While insider selling is not a positive sign, we can't be sure if it does mean insiders think the shares are fully valued, so it's only a weak sign. It is worth noting that this sale was 99% of Jacob Meldgaard's holding.

Insiders in TORM didn't buy any shares in the last year. The chart below shows insider transactions (by companies and individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!

I will like TORM better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.

Insiders At TORM Have Sold Stock Recently

The last quarter saw substantial insider selling of TORM shares. Specifically, Non-Executive Independent Director Par Trapp ditched kr.1.5m worth of shares in that time, and we didn't record any purchases whatsoever. In light of this it's hard to argue that all the insiders think that the shares are a bargain.

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. I reckon it's a good sign if insiders own a significant number of shares in the company. From our data, it seems that TORM insiders own 0.3% of the company, worth about kr.66m. Whilst better than nothing, we're not overly impressed by these holdings.

So What Does This Data Suggest About TORM Insiders?

An insider sold TORM shares recently, but they didn't buy any. And there weren't any purchases to give us comfort, over the last year. On the plus side, TORM makes money, and is growing profits. Insider ownership isn't particularly high, so this analysis makes us cautious about the company. So we'd only buy after careful consideration. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing TORM. Every company has risks, and we've spotted 4 warning signs for TORM (of which 1 doesn't sit too well with us!) you should know about.

Of course TORM 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 of direct interests only, but not derivative transactions or indirect interests.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St 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. Simply Wall St has no position in any stocks mentioned.