The fact that multiple Texas Pacific Land Corporation (NYSE:TPL) insiders offloaded a considerable amount of shares over the past year could have raised some eyebrows amongst investors. 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, shareholders should take a deeper look if several insiders are selling stock over a specific time period.

Although we don't think shareholders should simply follow insider transactions, we would consider it foolish to ignore insider transactions altogether.

The Last 12 Months Of Insider Transactions At Texas Pacific Land

Notably, that recent sale by Micheal Dobbs is the biggest insider sale of Texas Pacific Land shares that we've seen in the last year. That means that an insider was selling shares at slightly below the current price (US$1,371). 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. 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.

Happily, we note that in the last year insiders paid US$618k for 567.00 shares. But they sold 1.99k shares for US$2.6m. All up, insiders sold more shares in Texas Pacific Land than they bought, over the last year. The average sell price was around US$1,296. It's not particularly great to see insiders were selling shares at below recent prices. Of course, the sales could be motivated for a multitude of reasons, so we shouldn't jump to conclusions. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. By clicking on the graph below, you can see the precise details of each insider transaction!

Check out our latest analysis for Texas Pacific Land

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Texas Pacific Land Insiders Are Selling The Stock

There was substantially more insider selling, than buying, of Texas Pacific Land shares over the last three months. In that time, insiders dumped US$1.8m worth of shares. On the other hand we note insiders bought US$386k worth of shares. Because the selling vastly outweighs the buying, we'd say this is a somewhat bearish sign.

Insider Ownership Of Texas Pacific Land

Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. 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 appears that Texas Pacific Land insiders own 0.2% of the company, worth about US$54m. We've certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.

So What Does This Data Suggest About Texas Pacific Land Insiders?

Unfortunately, there has been more insider selling of Texas Pacific Land stock, than buying, in the last three months. Zooming out, the longer term picture doesn't give us much comfort. But since Texas Pacific Land is profitable and growing, we're not too worried by this. Insider ownership isn't particularly high, so this analysis makes us cautious about the company. We're in no rush to buy! So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. To that end, you should learn about the 2 warning signs we've spotted with Texas Pacific Land (including 1 which is a bit concerning).

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 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.