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 shareholders might well want to know whether insiders have been buying or selling shares in Transocean Ltd. (NYSE:RIG).
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 in the company. However, rules govern insider transactions, and certain disclosures are required.
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.'
Transocean Insider Transactions Over The Last Year
In the last twelve months, the biggest single purchase by an insider was when Executive VP and Chief Administrative Officer & Information Officer Howard Davis bought US$623k worth of shares at a price of US$6.35 per share. That means that even when the share price was higher than US$4.59 (the recent price), an insider wanted to purchase shares. Their view may have changed since then, but at least it shows they felt optimistic at the time. To us, it's very important to consider the price insiders pay for shares. It is generally more encouraging if they paid above the current price, as it suggests they saw value, even at higher levels. Notably Howard Davis was also the biggest seller.
In the last twelve months insiders purchased 151k shares for US$932k. But insiders sold 164k shares worth US$1.1m. Howard Davis ditched 164k shares over the year. The average price per share was US$6.64. You can see the insider transactions (by individuals) over the last year depicted in the chart below. By clicking on the graph below, you can see the precise details of each insider transaction!
If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.
Insiders at Transocean Have Bought Stock Recently
At Transocean,over the last quarter, we have observed quite a lot more insider buying than insider selling. In fact, three insiders bought US$811k worth of shares. But Howard Davis sold shares worth US$620k. We think insiders may be optimistic about the future, since insiders have been net buyers of shares.
Does Transocean 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. I reckon it's a good sign if insiders own a significant number of shares in the company. Transocean insiders own about US$160m worth of shares (which is 5.7% 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 Transocean Insider Transactions Indicate?
The recent insider purchases are heartening. However, the longer term transactions are not so encouraging. Overall, we'd prefer see a more sustained buying from directors, but with a significant insider holding and more recent purchases, Transocean insiders are reasonably well aligned, and optimistic for the future. Of course, the future is what matters most. So if you are interested in Transocean, you should check out this free report on analyst forecasts for the company.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.
For the purposes of this article, insiders are those individuals who report their transactions to the relevant regulatory body. We currently account for open market transactions and private dispositions, but not derivative transactions.
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 email@example.com. 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.