Investors can learn much by observing how corporate insiders manage positions in their own companies. There are many reasons that insiders may sell shares, including buying a house, paying for college, or estate planning. Yet, they generally buy shares for just one reason: they believe they will make more money.
Often, one of the largest and best-informed shareholders in any company is the chief executive officer. Let’s see whether TJX Companies Inc. (NYSE: TJX) CEO Ernie Herrman has been increasing or decreasing his share count over the past year and whether he knows something we don’t.
What You Need to Know About TJX Companies
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TJX Companies operates as an off-price apparel and home fashions retailer in North America, Europe, and Australia. It sells family apparel, including footwear and accessories; home fashions, such as home basics, furniture, rugs, lighting products, giftware, soft home products, decorative accessories, tableware, and cookware, as well as having expanded pet and gourmet food departments; jewelry and accessories; and other merchandise.
This retailer was incorporated in 1962 and is headquartered in Framingham, Massachusetts. That is also home to specialty retailer Staples. Competitors of TJX include Burlington Stores Inc. (NYSE: BURL), Dollar General Corp. (NYSE: DG), Kohls Corp. (NYSE: KSS), and Ross Stores Inc. (NASDAQ: ROST). Herrman has been chief executive at TJX since January 2016 and president since January 2011. (You won’t believe how much money Costco makes every minute.)
The company posted annual revenue of about $52.3 billion and has a market capitalization near $114.6 billion. Shares recently hit an all-time high of $102.76 and were last seen up about 8% year to date and over 31% higher than a year ago. The S&P 500’s gain in the past year is 27% or so.
How the CEO at TJX Companies Is Trading
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One year ago, Herrman owned more than 696,400 shares, worth almost $43.3 million. On last look, he owed about 631,100 shares, a stake of less than 1%. Although the stake shrank by over 65,300 shares, its value actually increased around 26.6% to more than $54.7 million as the share price rose last year.
| Shares a Year Ago | Shares Today | % Change |
| 696,439 | 631,098 | −9.38% |
As mentioned, CEO Ernie Herrman might have sold shares for many reasons. He is no doubt pleased to have the value of his stake continue to rise, even though he left some money on the table by parting with shares. The company appears to be running on all cylinders, judging by the robust quarterly and full-year results just posted. They were accompanied by a dividend hike and a stock buyback plan. However, guidance was weaker than expected. Analysts still overwhelmingly recommend buying shares, though their current consensus price target suggests less than 5% upside potential in the next 12 months.
Additional insiders to watch include Senior Vice President Douglas Mizzi. His stake is worth nearly $20.0 million. Board Chair Carol Meyrowitz has a $12.7 million stake, and former Director John O’Brien has a $12.4 million.
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