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 before you buy or sell Twin Disc, Incorporated (NASDAQ:TWIN), you may well want to know whether insiders have been buying or selling.
What Is Insider Selling?
Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock in the 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. For example, a Columbia University study found that 'insiders are more likely to engage in open market purchases of their own company’s stock when the firm is about to reveal new agreements with customers and suppliers'.
Twin Disc Insider Transactions Over The Last Year
The Independent Chairman of the Board David Rayburn made the biggest insider purchase in the last 12 months. That single transaction was for US$64k worth of shares at a price of US$6.49 each. So it's clear an insider wanted to buy, even at a higher price than the current share price (being US$5.31). Their view may have changed since then, but at least it shows they felt optimistic at the time. We always take careful note of the price insiders pay when purchasing shares. As a general rule, we feel more positive about a stock if insiders have bought shares at above current prices, because that suggests they viewed the stock as good value, even at a higher price.
In the last twelve months Twin Disc insiders were buying shares, but not selling. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. By clicking on the graph below, you can see the precise details of each insider transaction!
Twin Disc is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Does Twin Disc Boast High Insider Ownership?
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. We usually like to see fairly high levels of insider ownership. Insiders own 25% of Twin Disc shares, worth about US$18m. While this is a strong but not outstanding level of insider ownership, it's enough to indicate some alignment between management and smaller shareholders.
What Might The Insider Transactions At Twin Disc Tell Us?
It doesn't really mean much that no insider has traded Twin Disc shares in the last quarter. But insiders have shown more of an appetite for the stock, over the last year. Insiders do have a stake in Twin Disc and their transactions don't cause us concern. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Twin Disc. At Simply Wall St, we found 3 warning signs for Twin Disc that deserve your attention before buying any shares.
But note: Twin Disc may not be the best stock to buy. So take a peek at this free list of interesting companies with high ROE 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. 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.
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