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Should You Take Comfort From Insider Transactions At Martinrea International Inc. (TSE:MRE)?

Simply Wall St

It is not uncommon to see companies perform well in the years after insiders buy shares. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So we'll take a look at whether insiders have been buying or selling shares in Martinrea International Inc. (TSE:MRE).

Do Insider Transactions Matter?

Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock in the company. However, most countries require that the company discloses such transactions to the market.

Insider transactions are not the most important thing when it comes to long-term investing. But equally, we would consider it foolish to ignore insider transactions altogether. For example, a Harvard University study found that 'insider purchases earn abnormal returns of more than 6% per year.

View our latest analysis for Martinrea International

Martinrea International Insider Transactions Over The Last Year

In the last twelve months, the biggest single purchase by an insider was when President Frank D'Eramo bought CA$196k worth of shares at a price of CA$11.96 per share. That means that an insider was happy to buy shares at above the current price of CA$11.42. While their view may have changed since the purchase was made, this does at least suggest they have had confidence in the company's future. We always take careful note of the price insiders pay when purchasing shares. It is generally more encouraging if they paid above the current price, as it suggests they saw value, even at higher levels.

While Martinrea International insiders bought shares last year, they didn't sell. They paid about CA$10.50 on average. It's great to see insiders putting their own cash into the company's stock, albeit at below the recent share price. You can see the insider transactions (by 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!

TSX:MRE Recent Insider Trading, October 1st 2019

There are always plenty of stocks that insiders are buying. So if that suits your style you could check each stock one by one or you could take a look at this free list of companies. (Hint: insiders have been buying them).

Martinrea International Insiders Bought Stock Recently

Over the last quarter, Martinrea International insiders have spent a meaningful amount on shares. In total, insiders bought CA$392k worth of shares in that time, and we didn't record any sales whatsoever. This is a positive in our book as it implies some confidence.

Does Martinrea International Boast High Insider Ownership?

Many investors like to check how much of a company is owned by insiders. I reckon it's a good sign if insiders own a significant number of shares in the company. Our data indicates that Martinrea International insiders own about CA$13m worth of shares (which is 1.4% of the company). Whilst better than nothing, we're not overly impressed by these holdings.

So What Do The Martinrea International Insider Transactions Indicate?

The recent insider purchases are heartening. We also take confidence from the longer term picture of insider transactions. Insiders likely see value in Martinrea International shares, given these transactions (along with notable insider ownership of the company). If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its future.

If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, that have HIGH return on equity 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, but not derivative transactions.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.