Investors who take an interest in TransDigm Group Incorporated (NYSE:TDG) should definitely note that the Independent Director, William Dries, recently paid US$425 per share to buy US$425k worth of the stock. That certainly has us anticipating the best, especially since they thusly increased their own holding by 76%, potentially signalling some real optimism.
TransDigm Group Insider Transactions Over The Last Year
Notably, that recent purchase by William Dries is the biggest insider purchase of TransDigm Group shares that we've seen in the last year. So it's clear an insider wanted to buy, even at a higher price than the current share price (being US$338). It's very possible they regret the purchase, but it's more likely they are bullish about the company. 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.
While TransDigm Group insiders bought shares last year, they didn't sell. The average buy price was around US$475. I'd consider this a positive as it suggests insiders see value at around the current price. You can see the insider transactions (by individuals) over the last year depicted in the chart below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
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.
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. It's great to see that TransDigm Group insiders own 0.9% of the company, worth about US$161m. Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.
So What Does This Data Suggest About TransDigm Group Insiders?
It is good to see the recent insider purchase. We also take confidence from the longer term picture of insider transactions. Once you factor in the high insider ownership, it certainly seems like insiders are positive about TransDigm Group. Nice! So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. Be aware that TransDigm Group is showing 4 warning signs in our investment analysis, and 1 of those can't be ignored...
Of course TransDigm Group 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.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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.
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