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 shareholders might well want to know whether insiders have been buying or selling shares in Tronox Limited (NYSE:TROX).
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 equally, we would consider it foolish to ignore insider transactions altogether. For example, a Harvard University study found that ‘insider purchases earn abnormal returns of more than 6% per year.’
Tronox Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider purchase was by President Jeffry Quinn for US$204k worth of shares, at about US$17.00 per share. That means that an insider was happy to buy shares at above the current price. It’s very possible they regret the purchase, but it’s more likely they are bullish about the company. That purchase may suggest an expectation of positive returns over the long term.
Happily, we note that in the last year insiders paid US$688k for 72.80k shares. On the other hand they divested 10.00k shares, for US$157k. In total, Tronox insiders bought more than they sold over the last year. The average buy price was around US$9.46. This is nice to see since it implies that insiders might see value around current prices (around US$7.15). The chart below shows insider transactions over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!
Tronox is not the only stock that insiders are buying. For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.
Insiders at Tronox Have Bought Stock Recently
Over the last three months, we’ve seen significant insider buying at Tronox. Not only was there no selling that we can see, but they collectively bought US$409k worth of shares. That shows some optimism about the company’s future.
Does Tronox Boast High Insider Ownership?
For a common shareholder, it is worth checking how many shares are held by company insiders. I reckon it’s a good sign if insiders own a significant number of shares in the company. Tronox insiders own about US$9.9m worth of shares (which is 1.1% of the company). This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.
So What Do The Tronox Insider Transactions Indicate?
The recent insider purchases are heartening. We also take confidence from the longer term picture of insider transactions. However, we note that the company didn’t make a profit over the last twelve months, which makes us cautious. While the overall levels of insider ownership are below what we’d like to see, the history of transactions imply that Tronox insiders are reasonably well aligned, and optimistic for the future. 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.
Of course Tronox may not be the best stock to buy. So you may wish to see this free collection of high quality companies.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at firstname.lastname@example.org.