We often see insiders buying up shares in companies that perform well over the long term. 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 TransEnterix, Inc. (NYSEMKT:TRXC).
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.
Insider transactions are not the most important thing when it comes to long-term investing. But it is perfectly logical to keep tabs on what insiders are doing. For example, a Colombia University study found that ‘insiders are more likely to engage in open market purchases of their own company’s stock when the firm is about to reveal new agreements with customers and suppliers’.
TransEnterix Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider sale was by Chief Operating Officer Anthony Fernando for US$99k worth of shares, at about US$3.67 per share. Although we don’t gain confidence from insider selling, we note that this large sale was at well above current price of US$2.45. So it may not tell us anything about how insiders feel about the current share price. Anthony Fernando was the only individual insider to sell shares in the last twelve months. We also note that Synergy Life Science Partners, a company associated with director William Starling, sold US$22.7 million worth of stock at prices above $6 (not shown in below chart).
The chart below shows insider transactions in their personal capacity over the last year. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
I will like TransEnterix better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
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. A high insider ownership often makes company leadership more mindful of shareholder interests. TransEnterix insiders own 2.6% of the company, currently worth about US$14m based on the recent share price. I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.
So What Does This Data Suggest About TransEnterix Insiders?
It doesn’t really mean much that no insider has traded TransEnterix shares in the last quarter. Our analysis of TransEnterix insider transactions leaves us cautious. But we do like the fact that insiders own a fair chunk of the company. Therefore, you should should definitely take a look at this FREE report showing analyst forecasts for TransEnterix.
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 email@example.com.