It is not uncommon to see companies perform well in the years after insiders buy shares. 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 shareholders might well want to know whether insiders have been buying or selling shares in Targa Resources Corp. (NYSE:TRGP).
What Is Insider Selling?
It’s quite normal to see company insiders, such as board members, trading in company stock, from time to time. 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 it is perfectly logical to keep tabs on what insiders are doing. 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 Targa Resources
In the last twelve months, the biggest single sale by an insider was when Director Charles Crisp sold US$168k worth of shares at a price of US$54.13 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$39.40. So it may not tell us anything about how insiders feel about the current share price.
All up, insiders sold more shares in Targa Resources than they bought, over the last year. The sellers received a price of around US$54.16, on average. Insider selling doesn’t make us excited to buy. However, we do note that the average sale price was significantly higher than the current share price (which is US$39.40). 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 like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).
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. Targa Resources insiders own about US$198m worth of shares (which is 2.2% of the company). 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 Targa Resources Insiders?
The fact that there have been no Targa Resources insider transactions recently certainly doesn’t bother us. It’s great to see high levels of insider ownership, but looking back at the last year, we don’t gain confidence from the Targa Resources insiders selling. Therefore, you should should definitely take a look at this FREE report showing analyst forecasts for Targa Resources.
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.
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 firstname.lastname@example.org. 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.