We wouldn't blame Tower Semiconductor Ltd. (NASDAQ:TSEM) shareholders if they were a little worried about the fact that Russell C. Ellwanger, the CEO & Director recently netted about US$40m selling shares at an average price of US$251. That sale reduced their total holding by 42% which is hardly insignificant, but far from the worst we've seen.

Tower Semiconductor Insider Transactions Over The Last Year

Notably, that recent sale by Russell C. Ellwanger is the biggest insider sale of Tower Semiconductor shares that we've seen in the last year. That means that even when the share price was slightly below the current price of US$265, an insider wanted to cash in some shares. We generally consider it a negative if insiders have been selling, especially if they did so below the current price, because it implies that they considered a lower price to be reasonable. 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. We note that the biggest single sale was only 42% of Russell C. Ellwanger's holding.

Russell C. Ellwanger divested 248.50k shares over the last 12 months at an average price of US$241. The chart below shows insider transactions (by companies and individuals) over the last year. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

I will like Tower Semiconductor better if I see some big insider buys.

Insider Ownership Of Tower Semiconductor

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. Tower Semiconductor insiders own 0.4% of the company, currently worth about US$107m 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 Do The Tower Semiconductor Insider Transactions Indicate?

An insider sold stock recently, but they haven't been buying. Looking to the last twelve months, our data doesn't show any insider buying. But since Tower Semiconductor is profitable and growing, we're not too worried by this. It is good to see high insider ownership, but the insider selling leaves us cautious. While it's good to be aware of 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.

Of course Tower Semiconductor may not be the best stock to buy. So you may wish to see this free collection of high quality 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.

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.