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 Texas Instruments Incorporated (NASDAQ:TXN).
Do Insider Transactions Matter?
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.
Insider transactions are not the most important thing when it comes to long-term investing. But it is perfectly logical to keep tabs on what insiders are doing. 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’.
Texas Instruments Insider Transactions Over The Last Year
Senior Vice President of Embedded Processing R. Delagi made the biggest insider sale in the last 12 months. That single transaction was for US$3.4m worth of shares at a price of US$101 each. That means that an insider was selling shares at slightly below the current price (US$109). Even though it doesn’t necessarily mean anything, that’s certainly not a positive sign, in our book. As a general rule we consider it to be discouraging when insiders are selling below the current price. We note that the biggest single sale was only 24% of R. Delagi’s holding.
Over the last year we saw more insider selling of Texas Instruments shares, than buying. The sellers received a price of around US$101, on average. We don’t gain confidence from insider selling below the recent share price. Of course, the sales could be motivated for a multitude of reasons, so we shouldn’t jump to conclusions. You can see the insider transactions (by individuals) 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!
I will like Texas Instruments better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
Texas Instruments Insiders Are Selling The Stock
The last three months saw significant insider selling at Texas Instruments. In total, insiders sold US$16m 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.
Does Texas Instruments Boast High Insider Ownership?
Many investors like to check how much of a company is owned by insiders. I reckon it’s a good sign if insiders own a significant number of shares in the company. It’s great to see that Texas Instruments insiders own 0.2% of the company, worth about US$245m. 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 Texas Instruments Insider Transactions Indicate?
Insiders sold stock recently, but they haven’t been buying. Zooming out, the longer term picture doesn’t give us much comfort. On the plus side, Texas Instruments 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 Texas Instruments.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.
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