Want to participate in a research study? Help shape the future of investing tools and earn a $60 gift card!
We often see insiders buying up shares in companies that perform well over the long term. 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 Travelzoo (NASDAQ:TZOO).
Do Insider Transactions Matter?
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.
Insider transactions are not the most important thing when it comes to long-term investing. 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 Travelzoo
Founder Ralph Bartel made the biggest insider sale in the last 12 months. That single transaction was for US$2.3m worth of shares at a price of US$13.49 each. That means that an insider was selling shares at around the current price of US$13.20. They might be selling for a variety of reasons, but it's hard to argue this is a bullish sign. We usually pause to reflect on the potential that a stock has a high valuation, if insiders have been selling at around the current price. The only individual insider seller over the last year was Ralph Bartel.
Ralph Bartel divested 1.20m shares over the last 12 months at an average price of US$12.05. You can see a visual depiction of insider transactions (by individuals) over the last 12 months, below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).
Travelzoo Insiders Are Selling The Stock
There was substantially more insider selling, than buying, of Travelzoo shares over the last three months. We note Ralph Bartel cashed in US$1.5m worth of shares. On the other hand we note General Manager of Germany Christian Smart bought US$78k worth of shares. We don't view these transactions as a positive sign.
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. We usually like to see fairly high levels of insider ownership. Travelzoo insiders own 50% of the company, currently worth about US$79m 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 Does This Data Suggest About Travelzoo Insiders?
The insider sales have outweighed the insider buying, at Travelzoo, in the last three months. And our longer term analysis of insider transactions didn't bring confidence, either. But it is good to see that Travelzoo is growing earnings. The company boasts high insider ownership, but we're a little hesitant, given the history of share sales. Of course, the future is what matters most. So if you are interested in Travelzoo, 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.
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.