Don't Ignore The Insider Selling In Targa Resources

We wouldn't blame Targa Resources Corp. (NYSE:TRGP) shareholders if they were a little worried about the fact that D. Pryor, the President of Logistics & Transportation recently netted about US$3.2m selling shares at an average price of US$162. That sale reduced their total holding by 17% which is hardly insignificant, but far from the worst we've seen.

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Targa Resources Insider Transactions Over The Last Year

Over the last year, we can see that the biggest insider sale was by the Independent Director, Joe Perkins, for US$23m worth of shares, at about US$156 per share. That means that even when the share price was below the current price of US$170, an insider wanted to cash in some shares. We generally consider it a negative if insiders have been selling, especially if they did so below the current price, because it implies that they considered a lower price to be reasonable. Please do note, however, that sellers may have a variety of reasons for selling, so we don't know for sure what they think of the stock price. We note that the biggest single sale was only 49% of Joe Perkins's holding.

Insiders in Targa Resources didn't buy any shares in the last year. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. By clicking on the graph below, you can see the precise details of each insider transaction!

See our latest analysis for Targa Resources

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Insider Ownership Of Targa Resources

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. Targa Resources insiders own 1.5% of the company, currently worth about US$547m based on the recent share price. 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 Targa Resources Insiders?

Insiders sold Targa Resources shares recently, but they didn't buy any. And even if we look at the last year, we didn't see any purchases. But since Targa Resources is profitable and growing, we're not too worried by this. It is good to see high insider ownership, but the insider selling leaves us cautious. While it's good to be aware of what's going on with the insider's ownership and transactions, we make sure to also consider what risks are facing a stock before making any investment decision. While conducting our analysis, we found that Targa Resources has 3 warning signs and it would be unwise to ignore them.

But note: Targa Resources 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.