We often see insiders buying up shares in companies that perform well over the long term. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So we’ll take a look at whether insiders have been buying or selling shares in Telstra Corporation Limited (ASX:TLS).
What Is Insider Buying?
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 equally, we would consider it foolish to ignore insider transactions altogether. As Peter Lynch said, ‘insiders might sell their shares for any number of reasons, but they buy them for only one: they think the price will rise.’
The Last 12 Months Of Insider Transactions At Telstra
CEO, MD & Director Andrew Penn made the biggest insider sale in the last 12 months. That single transaction was for AU$972k worth of shares at a price of AU$3.24 each. So we know that an insider sold shares at around the present share price of AU$3.18. They could have a variety of motivations for selling, but it’s still not particularly encouraging to see. We generally tread carefully if insiders have been selling on market, even if they sold slightly above the current price. Andrew Penn was the only individual insider to sell over the last year.
In the last twelve months insiders purchased 82.88k shares for AU$268k. On the other hand they divested 300.00k shares, for AU$972k. The chart below shows insider transactions (by individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!
If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).
Telstra Insiders Are Selling The Stock
We’ve seen more insider selling than insider buying at Telstra recently. We note Andrew Penn cashed in AU$972k worth of shares. On the other hand we note insiders bought AU$268k worth of shares, as previously mentioned. Since the selling really does outweigh the buying, we’d say that these transactions may suggest that some insiders feel the shares are not cheap.
Insider Ownership of Telstra
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 appears that Telstra insiders own 0.04% of the company, worth about AU$15m. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.
What Might The Insider Transactions At Telstra Tell Us?
Unfortunately, there has been more insider selling of Telstra stock, than buying, in the last three months. And our longer term analysis of insider transactions didn’t bring confidence, either. Insider ownership isn’t particularly high, so this analysis makes us cautious about the company. So we’d only buy after careful consideration. Therefore, you should should definitely take a look at this FREE report showing analyst forecasts for Telstra.
Of course Telstra may not be the best stock to buy. So you may wish to see this free collection of high quality companies.
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If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.