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For Tempur Sealy International Insiders, Selling US$3.9m Of Shares Was A Smart Move

Simply Wall St ·  12/05/2023 20:01

Last week, Tempur Sealy International, Inc.'s (NYSE:TPX) stock jumped 12%, but insiders who sold US$3.9m worth of stock in over the past year are likely to be in a better position. Selling at an average price of US$37.67, which is higher than the current price might have been the right call as holding on to stock would have meant their investment would be worth less now than it was at the time of sale.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we do think it is perfectly logical to keep tabs on what insiders are doing.

View our latest analysis for Tempur Sealy International

Tempur Sealy International Insider Transactions Over The Last Year

Over the last year, we can see that the biggest insider sale was by the Chief Executive Officer of Tempur Sealy North America, H. Buster, for US$2.7m worth of shares, at about US$36.55 per share. So it's clear an insider wanted to take some cash off the table, even below the current price of US$43.93. 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. This single sale was just 15% of H. Buster's stake.

Tempur Sealy International insiders didn't buy any shares over the last year. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. 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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NYSE:TPX Insider Trading Volume December 5th 2023

For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

Insider Ownership

Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. A high insider ownership often makes company leadership more mindful of shareholder interests. Tempur Sealy International insiders own about US$208m worth of shares (which is 2.8% of the company). I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.

So What Does This Data Suggest About Tempur Sealy International Insiders?

It doesn't really mean much that no insider has traded Tempur Sealy International shares in the last quarter. While we feel good about high insider ownership of Tempur Sealy International, we can't say the same about the selling of shares. 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. To assist with this, we've discovered 1 warning sign that you should run your eye over to get a better picture of Tempur Sealy International.

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 currently account for open market transactions and private dispositions of direct interests only, but not derivative transactions or indirect interests.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.

Disclaimer: This content is for informational and educational purposes only and does not constitute a recommendation or endorsement of any specific investment or investment strategy. Read more
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