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Read This Before Buying Treasury Wine Estates Limited (ASX:TWE) Shares

Arjun Bhatia

We’ve lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. 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 we’ll take a look at whether insiders have been buying or selling shares in Treasury Wine Estates Limited (ASX:TWE).

What Is Insider Buying?

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.

Insider transactions are not the most important thing when it comes to long-term investing. 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.’

See our latest analysis for Treasury Wine Estates

Treasury Wine Estates Insider Transactions Over The Last Year

In the last twelve months, the biggest single sale by an insider was when CEO, MD & Director Michael Clarke sold AU$5.7m worth of shares at a price of AU$19.14 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 AU$14.18. So it may not shed much light on insider confidence at current levels. Michael Clarke was the only individual insider to sell shares in the last twelve months. Notably Michael Clarke was also the biggest buyer, having purchased AU$2.2m worth of shares.

In the last twelve months insiders purchased 123.94k shares for AU$2.2m. On the other hand they divested 600.00k shares, for AU$11m. Michael Clarke sold a total of 600.00k shares over the year at an average price of AU$18.97. You can see the insider transactions over the last year depicted in the chart below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

ASX:TWE Insider Trading December 20th 18

If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).

Treasury Wine Estates Insiders Bought Stock Recently

Over the last quarter, Treasury Wine Estates insiders have spent a meaningful amount on shares. Overall, 2 insiders shelled out AU$164k for shares in the company — and none sold. That shows some optimism about the company’s future.

Does Treasury Wine Estates 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. Treasury Wine Estates insiders own 0.2% of the company, currently worth about AU$25m based on the recent share price. Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.

So What Do The Treasury Wine Estates Insider Transactions Indicate?

It is good to see recent purchasing. However, the longer term transactions are not so encouraging. We don’t take much heart from transactions by Treasury Wine Estates insiders over the last year. But they own a reasonable amount of the company, and there was some buying recently. Overall they seem reasonably aligned. Therefore, you should should definitely take a look at this FREE report showing analyst forecasts for Treasury Wine Estates.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting 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 editorial-team@simplywallst.com.