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Should You Take Comfort From Insider Transactions At Merchants Bancorp (NASDAQ:MBIN)?

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 Merchants Bancorp (NASDAQ:MBIN).

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, such insiders must disclose their trading activities, and not trade on inside information.

We don't think shareholders should simply follow insider transactions. But equally, we would consider it foolish to ignore insider transactions altogether. As Peter Lynch said, 'insiders might sell their shares for any number of reasons, but they buy them for only one: they think the price will rise.

View our latest analysis for Merchants Bancorp

Merchants Bancorp Insider Transactions Over The Last Year

In the last twelve months, the biggest single purchase by an insider was when President of Merchants Capital Corp Michael Dury bought US$201k worth of shares at a price of US$16.73 per share. That implies that an insider found the current price of US$19.11 per share to be enticing. That means they have been optimistic about the company in the past, though they may have changed their mind. While we always like to see insider buying, it's less meaningful if the purchases were made at much lower prices, as the opportunity they saw may have passed. Happily, the Merchants Bancorp insider decided to buy shares at close to current prices. Michael Dury was the only individual insider to buy over the year.

The chart below shows insider transactions (by 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!

NasdaqCM:MBIN Recent Insider Trading, January 17th 2020

Merchants Bancorp is not the only stock that insiders are buying. For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

Insiders at Merchants Bancorp Have Sold Stock Recently

The last quarter saw substantial insider selling of Merchants Bancorp shares. Specifically, insiders ditched US$188k worth of shares in that time, and we didn't record any purchases whatsoever. This may suggest that some insiders think that the shares are not cheap.

Does Merchants Bancorp Boast High Insider Ownership?

Many investors like to check how much of a company is owned by insiders. We usually like to see fairly high levels of insider ownership. Merchants Bancorp insiders own about US$243m worth of shares (which is 44% of the company). I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.

What Might The Insider Transactions At Merchants Bancorp Tell Us?

Insiders sold stock recently, but they haven't been buying. On the other hand, the insider transactions over the last year are encouraging. On top of that, insiders own a significant portion of the company. So we're happy to look past recent trading. 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.

But note: Merchants Bancorp 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, but not derivative transactions.

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.

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. Thank you for reading.