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It is not uncommon to see companies perform well in the years after insiders buy shares. 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 TechTarget, Inc. (NASDAQ:TTGT).
Do Insider Transactions Matter?
It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, rules govern insider transactions, and certain disclosures are required.
We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. 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'.
TechTarget Insider Transactions Over The Last Year
In the last twelve months, the biggest single sale by an insider was when Lead Independent Director Bruce Levenson sold US$2.2m worth of shares at a price of US$17.22 per share. That means that an insider was selling shares at around the current price of US$15.33. They might be selling for a variety of reasons, but it's hard to argue this is a bullish sign. We usually pause to reflect on the potential that a stock has a high valuation, if insiders have been selling at around the current price.
In the last twelve months insiders netted US$18m for 827.50k shares sold. All up, insiders sold more shares in TechTarget than they bought, over the last year. The average sell price was around US$22.27. It is certainly not great to see that insiders have sold shares in the company. But we note that the selling, on average, was at well above the recently traded price of US$15.33. You can see the insider transactions (by individuals) over the last year depicted in the chart below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
If you like to buy stocks alongside management, then you might just love this freelist of companies. (Hint: insiders have been buying them).
Does TechTarget Boast High 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. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. It appears that TechTarget insiders own 18% of the company, worth about US$76m. We've certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.
What Might The Insider Transactions At TechTarget Tell Us?
The fact that there have been no TechTarget insider transactions recently certainly doesn't bother us. Our analysis of TechTarget insider transactions leaves us cautious. But we do like the fact that insiders own a fair chunk of the company. If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this freereport showing analyst forecasts for its future.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this freelist 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 email@example.com.
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Simply Wall St has no position in any of the companies mentioned. This article 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. 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.
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