Possible bearish signals as Tractor Supply Company (NASDAQ:TSCO) insiders disposed of US$1.6m worth of stock

Over the past year, many Tractor Supply Company (NASDAQ:TSCO) insiders sold a significant stake in the company which may have piqued investors’ interest. When analyzing insider transactions, it is usually more valuable to know whether insiders are buying versus knowing if they are selling, as the latter sends an ambiguous message. However, when multiple insiders sell stock over a specific duration, shareholders should take notice as that could possibly be a red flag.

While insider transactions are not the most important thing when it comes to long-term investing, logic dictates you should pay some attention to whether insiders are buying or selling shares.

See our latest analysis for Tractor Supply

The Last 12 Months Of Insider Transactions At Tractor Supply

Over the last year, we can see that the biggest insider sale was by the Senior VP & Chief Marketing Officer, Christi Korzekwa, for US$768k worth of shares, at about US$200 per share. That means that an insider was selling shares at slightly below the current price (US$224). 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. It is worth noting that this sale was only 45% of Christi Korzekwa’s holding.

In total, Tractor Supply insiders sold more than they bought 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!

NasdaqGS:TSCO Insider Trading Volume February 10th 2022

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 of Tractor Supply

Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. 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 Tractor Supply insiders own 0.5% of the company, worth about US$126m. 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 Do The Tractor Supply Insider Transactions Indicate?

It doesn’t really mean much that no insider has traded Tractor Supply shares in the last quarter. It’s great to see high levels of insider ownership, but looking back over the last year, we don’t gain confidence from the Tractor Supply insiders selling. While we like knowing what’s going on with the insider’s ownership and transactions, we make sure to also consider what risks are facing a stock before making any investment decision. Case in point: We’ve spotted 1 warning sign for Tractor Supply you should be aware of.

But note: Tractor Supply 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. 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.

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