Don't Ignore The Fact That This Insider Just Sold Some Shares In TE Connectivity Ltd. (NYSE:TEL)

By
Simply Wall St
Published
May 12, 2022
NYSE:TEL
Source: Shutterstock

We wouldn't blame TE Connectivity Ltd. (NYSE:TEL) shareholders if they were a little worried about the fact that Thomas Lynch, the Non-Executive Chairman of the Board recently netted about US$1.6m selling shares at an average price of US$127. However, that sale only accounted for 8.0% of their holding, so arguably it doesn't say much about their conviction.

Check out our latest analysis for TE Connectivity

TE Connectivity Insider Transactions Over The Last Year

In fact, the recent sale by Thomas Lynch was the biggest sale of TE Connectivity shares made by an insider individual in the last twelve months, according to our records. That means that an insider was selling shares at around the current price of US$122. We generally don't like to see insider selling, but the lower the sale price, the more it concerns us. We note that this sale took place at around the current price, so it isn't a major concern, though it's hardly a good sign.

All up, insiders sold more shares in TE Connectivity than they bought, over the last year. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. By clicking on the graph below, you can see the precise details of each insider transaction!

insider-trading-volume
NYSE:TEL Insider Trading Volume May 12th 2022

I will like TE Connectivity better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.

Insider Ownership

Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. A high insider ownership often makes company leadership more mindful of shareholder interests. It appears that TE Connectivity insiders own 0.2% of the company, worth about US$90m. We've certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.

So What Do The TE Connectivity Insider Transactions Indicate?

An insider sold stock recently, but they haven't been buying. Zooming out, the longer term picture doesn't give us much comfort. But since TE Connectivity is profitable and growing, we're not too worried by this. While insiders do own shares, they don't own a heap, and they have been selling. We'd practice some caution before buying! While we like knowing what's going on with the insider's ownership and transactions, we make sure to also consider what risks are facing a stock before making any investment decision. In terms of investment risks, we've identified 1 warning sign with TE Connectivity and understanding this should be part of your investment process.

If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, that have HIGH return on equity and low debt.

For the purposes of this article, insiders are those individuals who report their transactions to the relevant regulatory body. We currently account for open market transactions and private dispositions, but not derivative transactions.

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