Stock Analysis

Have Insiders Been Buying Tower Limited (NZSE:TWR) Shares This Year?

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NZSE:TWR
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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 we'll take a look at whether insiders have been buying or selling shares in Tower Limited (NZSE:TWR).

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, such insiders must disclose their trading activities, and not trade on inside information.

Insider transactions are not the most important thing when it comes to long-term investing. 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 Tower

Tower Insider Transactions Over The Last Year

The Independent Chairman Michael Stiassny made the biggest insider purchase in the last 12 months. That single transaction was for NZ$120k worth of shares at a price of NZ$0.60 each. So it's clear an insider wanted to buy, at around the current price, which is NZ$0.71. Of course they may have changed their mind. But this suggests they are optimistic. If someone buys shares at well below current prices, it's a good sign on balance, but keep in mind they may no longer see value. In this case we're pleased to report that the insider purchases were made at close to current prices.

In the last twelve months insiders purchased 550.72k shares for NZ$332k. But insiders sold 18.75k shares worth NZ$11k. In total, Tower insiders bought more than they sold 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
NZSE:TWR Insider Trading Volume December 9th 2020

There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of growing companies that insiders are buying.

Insiders at Tower Have Bought Stock Recently

At Tower,over the last quarter, we have observed quite a lot more insider buying than insider selling. In total, four insiders bought NZ$332k worth of shares in that time. But we did see insider Richard Harding sell shares worth NZ$11k. We think insiders may be optimistic about the future, since insiders have been net buyers of shares.

Does Tower 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. I reckon it's a good sign if insiders own a significant number of shares in the company. Based on our data, Tower insiders have about 2.1% of the stock, worth approximately NZ$6.2m. We consider this fairly low insider ownership.

What Might The Insider Transactions At Tower Tell Us?

It's certainly positive to see the recent insider purchases. We also take confidence from the longer term picture of insider transactions. While the overall levels of insider ownership are below what we'd like to see, the history of transactions imply that Tower insiders are reasonably well aligned, and optimistic for the future. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. To assist with this, we've discovered 1 warning sign that you should run your eye over to get a better picture of Tower.

But note: Tower 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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