Insiders were net sellers of TKO Group Holdings, Inc.'s (NYSE:TKO ) stock during the past year. That is, insiders sold more stock than they bought.
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.
TKO Group Holdings Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider sale was by the insider, Vincent McMahon, for US$642m worth of shares, at about US$76.41 per share. That means that an insider was selling shares at slightly below the current price (US$98.20). 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. Please do note, however, that sellers may have a variety of reasons for selling, so we don't know for sure what they think of the stock price. This single sale was just 29% of Vincent McMahon's stake. The only individual insider seller over the last year was Vincent McMahon.
Over the last year, we can see that insiders have bought 40.71k shares worth US$3.4m. But insiders sold 17.25m shares worth US$1.4b. Vincent McMahon divested 17.25m shares over the last 12 months at an average price of US$79.15. The chart below shows insider transactions (by companies and individuals) over the last year. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
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Insiders At TKO Group Holdings Have Sold Stock Recently
The last three months saw significant insider selling at TKO Group Holdings. In total, insider Vincent McMahon sold US$723m 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
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. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. It's great to see that TKO Group Holdings insiders own 4.9% of the company, worth about US$818m. 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 Do The TKO Group Holdings Insider Transactions Indicate?
An insider sold TKO Group Holdings shares recently, but they didn't buy any. Zooming out, the longer term picture doesn't give us much comfort. It is good to see high insider ownership, but the insider selling leaves us cautious. 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. Every company has risks, and we've spotted 1 warning sign for TKO Group Holdings you should know about.
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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 of direct interests only, but not derivative transactions or indirect interests.
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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.