Trinity Industries, Inc. (NYSE:TRN) insiders sold US$2.1m worth of stock, a possible red flag that's yet to materialize

By
Simply Wall St
Published
February 17, 2022
NYSE:TRN
Source: Shutterstock

While it’s been a great week for Trinity Industries, Inc. (NYSE:TRN) shareholders after stock gained 3.9%, they should consider it with a grain of salt. Even though stock prices were relatively low, insiders elected to sell US$2.1m worth of stock in the last year, which could indicate some expected downturn.

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.

View our latest analysis for Trinity Industries

Trinity Industries Insider Transactions Over The Last Year

The insider, John Adams, made the biggest insider sale in the last 12 months. That single transaction was for US$473k worth of shares at a price of US$30.09 each. That means that even when the share price was below the current price of US$31.27, an insider wanted to cash in some shares. When an insider sells below the current price, it suggests that they considered that lower price to be fair. That makes us wonder what they think of the (higher) recent valuation. 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 only 17% of John Adams's holding.

Trinity Industries insiders didn't buy any shares 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 want to know exactly who sold, for how much, and when, simply click on the graph below!

insider-trading-volume
NYSE:TRN Insider Trading Volume February 17th 2022

If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.

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. A high insider ownership often makes company leadership more mindful of shareholder interests. It appears that Trinity Industries insiders own 0.9% of the company, worth about US$28m. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.

What Might The Insider Transactions At Trinity Industries Tell Us?

It doesn't really mean much that no insider has traded Trinity Industries shares in the last quarter. We don't take much encouragement from the transactions by Trinity Industries insiders. The modest level of insider ownership is, at least, some comfort. 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 help with this, we've discovered 2 warning signs (1 makes us a bit uncomfortable!) that you ought to be aware of before buying any shares in Trinity Industries.

But note: Trinity Industries 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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