Insiders seem to have made the most of their holdings by selling US$23m worth of The TJX Companies, Inc. (NYSE: TJX) stock at an average sell price of US$66.50 during the past year. After the stock price dropped 5.2% last week, the company’s market value declined by US$3.9b, but insiders were able to mitigate their losses.
While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, logic dictates you should pay some attention to whether insiders are buying or selling shares.
In the last twelve months, the biggest single sale by an insider was when the Executive Chairman, Carol Meyrowitz, sold US$4.8m worth of shares at a price of US$67.62 per share. We generally don’t like to see insider selling, but the lower the sale price, the more it concerns us. The good news is that this large sale was well above the current price of US$61.27. So it may not tell us anything about how insiders feel about the current share price.
In total, TJX Companies insiders sold more than they bought over the last year. The chart below shows insider transactions (by companies and individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
I will like TJX Companies better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
The last quarter saw substantial insider selling of TJX Companies shares. In total, insiders sold US$12m worth of shares at that time, and we didn’t record any purchases whatsoever. This may suggest that some insiders think that the shares are not cheap.
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. High insider ownership often makes company leadership more mindful of shareholder interests. TJX Companies insiders own about US$122m worth of shares (which is 0.2% of the company). I like to see this level of insider ownership because it increases the chances that management is thinking about the best interests of shareholders.
Insiders haven’t bought TJX Companies stock in the last three months, but there was some selling. Zooming out, the longer-term picture doesn’t give us much comfort. On the plus side, TJX Companies makes money and is growing profits. While insiders do own a lot of shares in the company (which is good), our analysis of their transactions doesn’t make us feel confident about the company. So while it’s helpful to know what insiders are doing in terms of buying or selling, it’s also helpful to know the risks that a particular company is facing. At Simply Wall St, we’ve found that TJX Companies has 3 warning signs (1 is a bit unpleasant!) that deserve your attention before going any further with your analysis.
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 a 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 currently account for open market transactions and private dispositions, but not derivative transactions.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.