Should You Be Worried About Insider Transactions At The Travelers Companies, Inc. (NYSE:TRV)?

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 The Travelers Companies, Inc. (NYSE:TRV), you may well want to know whether insiders have been buying or selling.

What Is Insider Buying?

It’s quite normal to see company insiders, such as board members, trading in company stock, from time to time. However, most countries require that the company discloses such transactions to the market.

We don’t think shareholders should simply follow insider transactions. But logic dictates you should pay some attention to whether insiders are buying or selling shares. For example, a Columbia University study found that ‘insiders are more likely to engage in open market purchases of their own company’s stock when the firm is about to reveal new agreements with customers and suppliers’.

View our latest analysis for Travelers Companies

Travelers Companies Insider Transactions Over The Last Year

Over the last year, we can see that the biggest insider sale was by Vice Chairman & Chief Investment Officer William Heyman for US$1.1m worth of shares, at about US$131 per share. So it’s clear an insider wanted to take some cash off the table, even slightly below the current price of US$131. While sellers have a variety of reasons for selling, this isn’t particularly great to see. We generally consider it a negative if insiders have been selling on market, especially if they did so below the current price. It is worth noting that this sale was only 3.2% of William Heyman’s holding.

In the last twelve months insiders netted US$3.7m for 28.93k shares sold. Over the last year we saw more insider selling of Travelers Companies shares, than buying. The sellers received a price of around US$129, on average. We don’t gain much confidence from insider selling near the recent share price. But we don’t put too much weight on the insider selling, since sellers could have personal reasons. The chart below shows insider transactions (by 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!

NYSE:TRV Recent Insider Trading, March 22nd 2019
NYSE:TRV Recent Insider Trading, March 22nd 2019

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Travelers Companies Insiders Are Selling The Stock

Over the last three months, we’ve seen significant insider selling at Travelers Companies. Specifically, insiders ditched US$3.3m worth of shares in that time, and we didn’t record any purchases whatsoever. Overall this makes us a bit cautious, but it’s not the be all and end all.

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. Travelers Companies insiders own about US$116m worth of shares (which is 0.3% of the company). 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 Travelers Companies Insiders?

Insiders sold Travelers Companies shares recently, but they didn’t buy any. And there weren’t any purchases to give us comfort, over the last year. On the plus side, Travelers Companies makes money, and is growing profits. 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 Travelers Companies.

But note: Travelers Companies 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.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.