Over the past year, many Texas Pacific Land Corporation (NYSE:TPL) insiders sold a significant stake in the company which may have piqued investors' interest. Knowing whether insiders are buying is usually more helpful when evaluating insider transactions, as insider selling can have various explanations. However, if numerous insiders are selling, shareholders should investigate more.

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.

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Texas Pacific Land Insider Transactions Over The Last Year

Over the last year, we can see that the biggest insider sale was by the Senior VP, Micheal Dobbs, for US$1.5m worth of shares, at about US$1,278 per share. That means that even when the share price was below the current price of US$1,331, an insider wanted to cash in some shares. 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. While insider selling is not a positive sign, we can't be sure if it does mean insiders think the shares are fully valued, so it's only a weak sign. This single sale was just 45% of Micheal Dobbs's stake.

Over the last year, we can see that insiders have bought 549.00 shares worth US$643k. But insiders sold 1.99k shares worth US$2.6m. All up, insiders sold more shares in Texas Pacific Land than they bought, over the last year. The chart below shows insider transactions (by companies and individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!

See our latest analysis for Texas Pacific Land

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Texas Pacific Land Insiders Are Selling The Stock

Over the last three months, we've seen notably more insider selling, than insider buying, at Texas Pacific Land. In total, insiders sold US$1.8m worth of shares in that time. On the other hand we note insiders bought US$449k worth of shares. Since the selling really does outweigh the buying, we'd say that these transactions may suggest that some insiders feel the shares are not cheap.

Insider Ownership Of Texas Pacific Land

For a common shareholder, it is worth checking how many shares are held by company insiders. We usually like to see fairly high levels of insider ownership. It appears that Texas Pacific Land insiders own 0.2% of the company, worth about US$52m. 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 Texas Pacific Land Tell Us?

The stark truth for Texas Pacific Land is that there has been more insider selling than insider buying in the last three months. Despite some insider buying, the longer term picture doesn't make us feel much more positive. On the plus side, Texas Pacific Land makes money, and is growing profits. Insider ownership isn't particularly high, so this analysis makes us cautious about the company. So we'd only buy after careful consideration. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. Our analysis shows 2 warning signs for Texas Pacific Land (1 shouldn't be ignored!) and we strongly recommend you look at these before investing.

But note: Texas Pacific Land 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 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.