Shareholders May Not Overlook Transaction Capital Insiders Selling R51m In Stock

While it’s been a great week for Transaction Capital Limited (JSE:TCP) shareholders after stock gained 17%, they should consider it with a grain of salt. Although prices were relatively low, insiders chose to sell R51m worth of stock in the past 12 months. This could be a sign of impending weakness.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, logic dictates you should pay some attention to whether insiders are buying or selling shares.

Check out our latest analysis for Transaction Capital

The Last 12 Months Of Insider Transactions At Transaction Capital

In the last twelve months, the biggest single sale by an insider was when the CEO & Executive Director, David Hurwitz, sold R51m worth of shares at a price of R34.15 per share. We generally don't like to see insider selling, but the lower the sale price, the more it concerns us. The silver lining is that this sell-down took place above the latest price (R7.99). So it may not tell us anything about how insiders feel about the current share price. The only individual insider seller over the last year was David Hurwitz.

Over the last year, we can see that insiders have bought 1.71m shares worth R22m. But insiders sold 1.60m shares worth R51m. You can see the insider transactions (by companies and 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!

If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.

Does Transaction Capital Boast High 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 Transaction Capital insiders own 15% of the company, worth about R920m. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.

So What Does This Data Suggest About Transaction Capital Insiders?

It doesn't really mean much that no insider has traded Transaction Capital shares in the last quarter. It's great to see high levels of insider ownership, but looking back over the last year, we don't gain confidence from the Transaction Capital insiders selling. So while it's helpful to know what insiders are doing in terms of buying or selling, it's also helpful to know the risks that a particular company is facing. Case in point: We've spotted 3 warning signs for Transaction Capital you should be aware of, and 1 of them is significant.

Of course Transaction Capital may not be the best stock to buy. So you may wish to see this free collection of high quality companies.

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 of direct interests only, but not derivative transactions or indirect interests.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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. Simply Wall St has no position in any stocks mentioned.