We often see insiders buying up shares in companies that perform well over the long term. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So we’ll take a look at whether insiders have been buying or selling shares in TreeHouse Foods, Inc. (NYSE:THS).
Do Insider Transactions Matter?
It’s quite normal to see company insiders, such as board members, trading in company stock, from time to time. However, rules govern insider transactions, and certain disclosures are required.
We don’t think shareholders should simply follow insider transactions. But equally, we would consider it foolish to ignore insider transactions altogether. As Peter Lynch said, ‘insiders might sell their shares for any number of reasons, but they buy them for only one: they think the price will rise.’
See our latest analysis for TreeHouse Foods
TreeHouse Foods Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider sale was by Executive VP Thomas O’Neill for US$191k worth of shares, at about US$48.00 per share. That means that even when the share price was below the current price of US$54.05, an insider wanted to cash in some shares. Even though it doesn’t necessarily mean anything, that’s certainly not a positive sign, in our book. As a general rule we consider it to be discouraging when insiders are selling below the current price. We note that the biggest single sale was only 2.9% of Thomas O’Neill’s holding.
We note that in the last year insiders divested 4.87k shares for a total of US$237k. All up, insiders sold more shares in TreeHouse Foods than they bought, over the last year. The average sell price was around US$48.72. It’s not particularly great to see insiders were selling shares around current prices. While some insiders have decided to take some money off the table, we wouldn’t put too much weight on this fact. You can see a visual depiction of insider transactions 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!
If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.
TreeHouse Foods Insiders Are Selling The Stock
The last three months saw significant insider selling at TreeHouse Foods. Specifically, Thomas O’Neill ditched US$191k worth of shares in that time, and we didn’t record any purchases whatsoever. This may suggest that some insiders think that the shares are not cheap.
Insider Ownership
Many investors like to check how much of a company is owned by insiders. I reckon it’s a good sign if insiders own a significant number of shares in the company. TreeHouse Foods insiders own about US$56m worth of shares (which is 1.9% of the company). I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.
So What Does This Data Suggest About TreeHouse Foods Insiders?
An insider sold TreeHouse Foods shares recently, but they didn’t buy any. Looking to the last twelve months, our data doesn’t show any insider buying. Insiders own shares, but we’re still pretty cautious, given the history of sales. So we’d only buy after careful consideration. Therefore, you should should definitely take a look at this FREE report showing analyst forecasts for TreeHouse Foods.
Of course TreeHouse Foods may not be the best stock to buy. So you may wish to see this free collection of high quality companies.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.