Possible Bearish Signals With Target Hospitality Insiders Disposing Stock

The fact that multiple Target Hospitality Corp. (NASDAQ:TH) insiders offloaded a considerable amount of shares over the past year could have raised some eyebrows amongst investors. When evaluating insider transactions, knowing whether insiders are buying versus if they selling is usually more beneficial, as the latter can be open to many interpretations. However, when multiple insiders sell stock over a specific duration, shareholders should take notice as that could possibly be a red flag.

Although we don't think shareholders should simply follow insider transactions, we do think it is perfectly logical to keep tabs on what insiders are doing.

View our latest analysis for Target Hospitality

Target Hospitality Insider Transactions Over The Last Year

The Independent Director, Jeffrey Sagansky, made the biggest insider sale in the last 12 months. That single transaction was for US$3.1m worth of shares at a price of US$15.53 each. We generally don't like to see insider selling, but the lower the sale price, the more it concerns us. It's of some comfort that this sale was conducted at a price well above the current share price, which is US$13.95. So it may not shed much light on insider confidence at current levels.

In the last twelve months insiders purchased 5.57k shares for US$83k. But insiders sold 241.95k shares worth US$3.8m. In total, Target Hospitality insiders sold more than they bought over the last year. The chart below shows insider transactions (by companies and individuals) over the last year. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

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

Have Target Hospitality Insiders Traded Recently?

In the last three months, Chief Commercial Officer Troy Schrenk sold US$3.1k worth of shares. That's not much at all. Looking at the net result, we don't think this recent trading sheds much light on how insiders, as a group, are feeling about the company's prospects.

Does Target Hospitality Boast High Insider Ownership?

For a common shareholder, it is worth checking how many shares are held by company insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. Insiders own 3.8% of Target Hospitality shares, worth about US$54m. 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 Does This Data Suggest About Target Hospitality Insiders?

Our data shows a little more insider selling, but no insider buying, in the last three months. However, the sales are not big enough to concern us at all. Recent insider selling makes us a little nervous, in light of the broader picture of Target Hospitality insider transactions. But we do like the fact that insiders own a fair chunk of the company. 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 instance, we've identified 3 warning signs for Target Hospitality (1 makes us a bit uncomfortable) you should be aware of.

But note: Target Hospitality 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 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.