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Insiders at Tempur Sealy International, Inc. (NYSE:TPX) sold US$2.6m worth of stock, a potential red flag that needs to be monitored


While Tempur Sealy International, Inc. (NYSE:TPX) shareholders have enjoyed a good week with stock up 13%, they need remain vigilant. The fact that insiders chose to dispose of US$2.6m worth of stock in the past 12 months even though prices were relatively low could be indicative of some anticipated weakness.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we would consider it foolish to ignore insider transactions altogether.

See our latest analysis for Tempur Sealy International

Tempur Sealy International Insider Transactions Over The Last Year

In fact, the recent sale by David Montgomery was the biggest sale of Tempur Sealy International shares made by an insider individual in the last twelve months, according to our records. That means that an insider was selling shares at slightly below the current price (US$27.67). When an insider sells below the current price, it suggests that they considered that lower price to be fair. That makes us wonder what they think of the (higher) recent valuation. However, while insider selling is sometimes discouraging, it’s only a weak signal. It is worth noting that this sale was only 11% of David Montgomery’s holding.

You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

NYSE:TPX Insider Trading Volume September 14th 2022

If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.

Insiders At Tempur Sealy International Have Sold Stock Recently

The last quarter saw substantial insider selling of Tempur Sealy International shares. In total, Executive Vice President of Global Business Strategy & Development David Montgomery dumped US$2.6m worth of shares in that time, and we didn’t record any purchases whatsoever. This may suggest that some insiders think that the shares are not cheap.

Insider Ownership

Many investors like to check how much of a company is owned by insiders. We usually like to see fairly high levels of insider ownership. Tempur Sealy International insiders own 2.3% of the company, currently worth about US$110m based on the recent share price. 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 Does This Data Suggest About Tempur Sealy International Insiders?

An insider hasn’t bought Tempur Sealy International stock in the last three months, but there was some selling. Looking to the last twelve months, our data doesn’t show any insider buying. But it is good to see that Tempur Sealy International is growing earnings. 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. For example, Tempur Sealy International has 2 warning signs (and 1 which is a bit concerning) we think you should know about.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.

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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