It is not uncommon to see companies perform well in the years after insiders buy shares. On the other hand, we’d be remiss not to mention that insider sales have been known to precede tough periods for a business. So we’ll take a look at whether insiders have been buying or selling shares in Sensata Technologies Holding PLC (NYSE:ST).
Do Insider Transactions Matter?
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 don’t think shareholders should simply follow insider transactions. 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.’
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Sensata Technologies Holding Insider Transactions Over The Last Year
Non-Executive Director Thomas Wroe made the biggest insider sale in the last 12 months. That single transaction was for US$198k worth of shares at a price of US$54.33 each. So what is clear is that an insider saw fit to sell at around the current price of US$47.44. While their view may have changed since the sale, this is not a particularly positive fact. Arguably, insider selling at around current prices should give us reason to reflect on whether the stock is fully valued at the moment. Thomas Wroe was the only individual insider to sell over the last year.
You can see a visual depiction of insider transactions (by individuals) over the last 12 months, below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
I will like Sensata Technologies Holding better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
Does Sensata Technologies Holding 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. 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 Sensata Technologies Holding insiders own 0.4% of the company, worth about US$34m. 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 Do The Sensata Technologies Holding Insider Transactions Indicate?
There haven’t been any insider transactions in the last three months — that doesn’t mean much. Our analysis of Sensata Technologies Holding insider transactions leaves us cautious. But it’s good to see that insiders own shares in the company. Of course, the future is what matters most. So if you are interested in Sensata Technologies Holding, you should check out this free report on analyst forecasts for the company.
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.
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.