Trex Company Insiders Sold US$2.1m Of Shares Suggesting Hesitancy

In the last year, many Trex Company, Inc. (NYSE:TREX) insiders sold a substantial stake in the company which may have sparked shareholders' attention. When analyzing insider transactions, it is usually more valuable to know whether insiders are buying versus knowing if they are selling, as the latter sends an ambiguous message. However, shareholders should take a deeper look if several insiders are selling stock over a specific time period.

While insider transactions are not the most important thing when it comes to long-term investing, we do think it is perfectly logical to keep tabs on what insiders are doing.

Check out our latest analysis for Trex Company

The Last 12 Months Of Insider Transactions At Trex Company

In the last twelve months, the biggest single sale by an insider was when the Senior VP & Chief Human Resources Officer, Jacob Rudolph, sold US$1.5m worth of shares at a price of US$90.90 per share. While we don't usually like to see insider selling, it's more concerning if the sales take place at a lower price. It's of some comfort that this sale was conducted at a price well above the current share price, which is US$78.48. So it may not tell us anything about how insiders feel about the current share price. Notably Jacob Rudolph was also the biggest buyer, having purchased US$5.2k worth of shares.

In total, Trex Company insiders sold more than they bought over the last year. You can see a visual depiction of insider transactions (by companies and 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!

I will like Trex Company better if I see some big insider buys. While we wait, check out this free list of undervalued and small cap stocks with considerable, recent, insider buying.

Insiders At Trex Company Have Sold Stock Recently

We've seen more insider selling than insider buying at Trex Company recently. We note Senior VP & Chief Human Resources Officer Jacob Rudolph cashed in US$1.5m worth of shares. Meanwhile Senior VP & Chief Human Resources Officer Jacob Rudolph bought US$2.8k worth. We don't view these transactions as a positive sign.

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. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. It appears that Trex Company insiders own 0.5% of the company, worth about US$38m. While this is a strong but not outstanding level of insider ownership, it's enough to indicate some alignment between management and smaller shareholders.

So What Do The Trex Company Insider Transactions Indicate?

The stark truth for Trex Company is that there has been more insider selling than insider buying in the last three months. And our longer term analysis of insider transactions didn't bring confidence, either. But it is good to see that Trex Company is growing earnings. Insider ownership isn't particularly high, so this analysis makes us cautious about the company. We'd practice some caution before buying! So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. For example - Trex Company has 1 warning sign we think you should be aware of.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting 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.

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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.

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