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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 before you buy or sell Trio-Tech International (NYSEMKT:TRT), you may well want to know whether insiders have been buying or selling.
What Is Insider Selling?
It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. 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. For example, a Harvard University study found that ‘insider purchases earn abnormal returns of more than 6% per year.’
The Last 12 Months Of Insider Transactions At Trio-Tech International
Over the last year, we can see that the biggest insider sale was by Director Jason Adelman for US$52k worth of shares, at about US$5.89 per share. While the sale doesn’t make us feel confident, we do note it was conducted at a price well above the current share price, which is US$3.01. So it may not tell us anything about how insiders feel about the current share price. The only individual insider seller over the last year was Jason Adelman.
Jason Adelman sold a total of 15.00k shares over the year at an average price of US$5.81. 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!
If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.
Insider Ownership of Trio-Tech International
Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Trio-Tech International insiders own about US$4.0m worth of shares. That equates to 37% of the company. While this is a strong but not outstanding level of insider ownership, it’s enough to indicate some alignment between management and smaller shareholders.
What Might The Insider Transactions At Trio-Tech International Tell Us?
The fact that there have been no Trio-Tech International insider transactions recently certainly doesn’t bother us. Still, the insider transactions at Trio-Tech International in the last 12 months are not very heartening. The modest level of insider ownership is, at least, some comfort. To put this in context, take a look at how a company has performed in the past. You can access this detailed graph of past earnings, revenue and cash flow .
But note: Trio-Tech International 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.
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.