We’ve lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. On the other hand, we’d be remiss not to mention that insider sales have been known to precede tough periods for a business. So before you buy or sell Tyson Foods, Inc. (NYSE:TSN), you may well want to know whether insiders have been buying or selling.
Do Insider Transactions Matter?
It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, such insiders must disclose their trading activities, and not trade on inside information.
Insider transactions are not the most important thing when it comes to long-term investing. But logic dictates you should pay some attention to whether insiders are buying or selling shares. For example, a Harvard University study found that ‘insider purchases earn abnormal returns of more than 6% per year.’
The Last 12 Months Of Insider Transactions At Tyson Foods
Thomas Hayes made the biggest insider sale in the last 12 months. That single transaction was for US$1.4m worth of shares at a price of US$68.85 each. So we know that an insider sold shares at around the present share price of US$52.34. While their view may have changed since the sale, this is not a particularly positive fact. Arguably, insider selling at around current prices should give us reason to reflect on whether the stock is fully valued at the moment.
Over the last year, we can see that insiders have bought 9.60k shares worth US$602k. But insiders sold 89.52k shares worth US$6.4m. All up, insiders sold more shares in Tyson Foods than they bought, over the last year. They sold for an average price of about US$71.94. We are not joyful about insider selling. However, we do note that the average sale price was significantly higher than the current share price (which is US$52.34). The chart below shows insider transactions over the last year. 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.
Tyson Foods Insiders Are Selling The Stock
Over the last three months, we’ve seen notably more insider selling, than insider buying, at Tyson Foods. In that time, insiders dumped US$1.4m worth of shares. On the flip side, Lead Independent Director Gaurdie Banister spent US$400k on purchasing shares. We don’t view these transactions as a positive sign.
I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. It’s great to see that Tyson Foods insiders own 1.4% of the company, worth about US$260m. Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.
What Might The Insider Transactions At Tyson Foods Tell Us?
The insider sales have outweighed the insider buying, at Tyson Foods, in the last three months. And our longer term analysis of insider transactions didn’t bring confidence, either. But since Tyson Foods 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. Therefore, you should should definitely take a look at this FREE report showing analyst forecasts for Tyson Foods.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting 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 firstname.lastname@example.org.