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Should You Be Worried About Insider Transactions At Thermo Fisher Scientific Inc. (NYSE:TMO)?

Simply Wall St

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We often see insiders buying up shares in companies that perform well over the long term. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So shareholders might well want to know whether insiders have been buying or selling shares in Thermo Fisher Scientific Inc. (NYSE:TMO).

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 it is perfectly logical to keep tabs on what insiders are doing. 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.'

See our latest analysis for Thermo Fisher Scientific

The Last 12 Months Of Insider Transactions At Thermo Fisher Scientific

In the last twelve months, the biggest single sale by an insider was when the Senior VP & President of Customer Channels, Gregory Herrema, sold US$1.8m worth of shares at a price of US$247 per share. That means that an insider was selling shares at slightly below the current price (US$292). As a general rule we consider it to be discouraging when insiders are selling below the current price, because it suggests they were happy with a lower valuation. However, while insider selling is sometimes discouraging, it's only a weak signal. It is worth noting that this sale was only 25.9% of Gregory Herrema's holding.

We note that in the last year insiders divested 18139 shares for a total of US$4.5m. Thermo Fisher Scientific insiders didn't buy any shares over the last year. The chart below shows insider transactions (by individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

NYSE:TMO Recent Insider Trading, June 27th 2019

If you like to buy stocks that insiders are buying, rather than selling, then you might just love this free list of companies. (Hint: insiders have been buying them).

Insiders at Thermo Fisher Scientific Have Sold Stock Recently

The last three months saw significant insider selling at Thermo Fisher Scientific. In total, C. Harris sold US$74k worth of shares in that time, and we didn't record any purchases whatsoever. In light of this it's hard to argue that all the insiders think that the shares are a bargain.

Insider Ownership of Thermo Fisher Scientific

Many investors like to check how much of a company is owned by insiders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Thermo Fisher Scientific insiders own about US$242m worth of shares (which is 0.2% 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.

What Might The Insider Transactions At Thermo Fisher Scientific Tell Us?

An insider hasn't bought Thermo Fisher Scientific stock in the last three months, but there was some selling. And even if we look to the last year, we didn't see any purchases. But it is good to see that Thermo Fisher Scientific is growing earnings. It is good to see high insider ownership, but the insider selling leaves us cautious. If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its future.

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.

For the purposes of this article, insiders are those individuals who report their transactions to the relevant regulatory body.

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 editorial-team@simplywallst.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.