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It is not uncommon to see companies perform well in the years after insiders buy shares. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So before you buy or sell TC Energy Corporation (TSE:TRP), you may well want to know whether insiders have been buying or selling.
What Is Insider Selling?
Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock on the market. However, such insiders must disclose their trading activities, and not trade on inside information.
We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. But logic dictates you should pay some attention to whether insiders are buying or selling shares. 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.'
TC Energy Insider Transactions Over The Last Year
In the last twelve months, the biggest single sale by an insider was when the , David Kohlenberg, sold CA$969k worth of shares at a price of CA$58.64 per share. That means that an insider was selling shares at slightly below the current price (CA$65.83). As a general rule we consider it to be discouraging when insiders are selling below the current price, because it suggests they were happy with a lower valuation. However, while insider selling is sometimes discouraging, it's only a weak signal. This single sale was 53.1% of David Kohlenberg's stake.
Over the last year, we can see that insiders have bought 45376 shares worth CA$2.5m. But insiders sold 20434 shares worth CA$1.2m. Overall, TC Energy insiders were net buyers last year. They paid about CA$54.90 on average. These transactions show that insiders have confidence to invest their own money in the stock, albeit at slightly below the recent price. You can see a visual depiction of insider transactions (by individuals) over the last 12 months, below. By clicking on the graph below, you can see the precise details of each insider transaction!
TC Energy is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Insiders at TC Energy Have Bought Stock Recently
Over the last three months, we've seen significant insider buying at TC Energy. In total, insiders bought CA$742k worth of shares in that time, and we didn't record any sales whatsoever. This could be interpreted as suggesting a positive outlook.
Does TC Energy Boast High Insider Ownership?
Many investors like to check how much of a company is owned by 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. TC Energy insiders own about CA$58m worth of shares. That equates to 0.09% of the company. 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 TC Energy Tell Us?
The recent insider purchases are heartening. We also take confidence from the longer term picture of insider transactions. When combined with notable insider ownership, these factors suggest TC Energy insiders are well aligned, and that they may think the share price is too low. If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its future.
But note: TC Energy may not be the best stock to buy. So take a peek at this free list of interesting companies with high ROE and low debt.
For the purposes of this article, insiders are those individuals who report their transactions to the relevant regulatory body.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
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.