It is not uncommon to see companies perform well in the years after insiders buy shares. 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 we’ll take a look at whether insiders have been buying or selling shares in Tilly’s Inc (NYSE:TLYS).
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.
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 Colombia 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’.
The Last 12 Months Of Insider Transactions At Tilly’s
In the last twelve months, the biggest single sale by an insider was when Co-Founder Hezy Shaked sold US$9.6m worth of shares at a price of US$18.50 per share. So we know that an insider sold shares at around the present share price of US$14.95. They might be selling for a variety of reasons, but it’s hard to argue this is a bullish sign. Arguably, insider selling at current prices should give us reason to reflect on whether the stock is fully valued at the moment.
In the last twelve months insiders netted US$10m for 558.27k shares sold. 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!
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Tilly’s Insiders Are Selling The Stock
Over the last three months, we’ve seen significant insider selling at Tilly’s. Specifically, Hezy Shaked ditched US$9.6m 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.
Does Tilly’s Boast High Insider Ownership?
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. 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’s great to see that Tilly’s insiders own 28% of the company, worth about US$126m. 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 Do The Tilly’s Insider Transactions Indicate?
An insider sold Tilly’s shares recently, but they didn’t buy any. Furthermore, transactions over the last twelve months dispel the notion that insiders won’t sell readily. But since Tilly’s is profitable and growing, we’re not too worried by this. Insider ownership isn’t particularly high, so this analysis makes us cautious about the company. We’re in no rush to buy! Of course, the future is what matters most. So if you are interested in Tilly’s, you should check out this free report on analyst forecasts for the company.
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.