We often see insiders buying up shares in companies that perform well over the long term. The flip side of that is that there are more than a few examples of insiders dumping stock prior to a period of weak performance. So we’ll take a look at whether insiders have been buying or selling shares in Tile Shop Holdings Inc (NASDAQ:TTS).
What Is Insider Selling?
It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, most countries require that the company discloses such transactions to the market.
We don’t think shareholders should simply follow insider transactions. But equally, we would consider it foolish to ignore insider transactions altogether. For example, a Harvard University study found that ‘insider purchases earn abnormal returns of more than 6% per year.’
Tile Shop Holdings Insider Transactions Over The Last Year
In the last twelve months, the biggest single purchase by an insider was when Director Peter Jacullo bought US$2.3m worth of shares at a price of US$5.95 per share. So it’s clear an insider wanted to buy, at around the current price. That means they have been optimistic about the company in the past, though they may have changed their mind. In any event it’s generally a positive if insiders are buying shares at around the current price.
Happily, we note that in the last year insiders bought 1.37m shares for a total of US$8.4m. In total, Tile Shop Holdings insiders bought more than they sold over the last year. They paid about US$6.14 on average. It’s great to see insiders putting their own cash into the company’s stock, albeit at below the recent share price (US$6.19). You can see the insider transactions over the last year depicted in the chart below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).
Insiders at Tile Shop Holdings Have Bought Stock Recently
Over the last quarter, Tile Shop Holdings insiders have spent a meaningful amount on shares. Not only was there no selling that we can see, but they collectively bought US$1.8m worth of shares. This could be interpreted as suggesting a positive outlook.
Insider Ownership of Tile Shop Holdings
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. Tile Shop Holdings insiders own about US$85m worth of shares. That equates to 26% of the company. This level of insider ownership is good but just short of being particularly stand-out, but it certainly does suggest a reasonable degree of alignment.
So What Do The Tile Shop Holdings Insider Transactions Indicate?
It’s certainly positive to see the recent insider purchases. We also take confidence from the longer term picture of insider transactions. When combined with notable insider ownership, these factors suggest Tile Shop Holdings insiders are well aligned, and that they may think the share price is too low. If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its future.
Of course Tile Shop Holdings 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 firstname.lastname@example.org.