Should You Take Comfort From Insider Transactions At Muscle Maker, Inc. (NASDAQ:GRIL)?
It is not uncommon to see companies perform well in the years after insiders buy shares. The flip side of that is that there are more than a few examples of insiders dumping stock prior to a period of weak performance. So before you buy or sell Muscle Maker, Inc. (NASDAQ:GRIL), you may well want to know whether insiders have been buying or selling.
What Is Insider Selling?
It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, such insiders must disclose their trading activities, and not trade on inside information.
Insider transactions are not the most important thing when it comes to long-term investing. But logic dictates you should pay some attention to whether insiders are buying or selling shares. For example, a Harvard University study found that 'insider purchases earn abnormal returns of more than 6% per year.
View our latest analysis for Muscle Maker
The Last 12 Months Of Insider Transactions At Muscle Maker
Independent Director Alfred Southall made the biggest insider purchase in the last 12 months. That single transaction was for US$114k worth of shares at a price of US$2.00 each. So it's clear an insider wanted to buy, even at a higher price than the current share price (being US$1.83). It's very possible they regret the purchase, but it's more likely they are bullish about the company. To us, it's very important to consider the price insiders pay for shares. As a general rule, we feel more positive about a stock if insiders have bought shares at above current prices, because that suggests they viewed the stock as good value, even at a higher price.
In the last twelve months Muscle Maker insiders were buying shares, but not selling. They paid about US$1.03 on average. We don't deny that it is nice to see insiders buying stock in the company. However, we do note that they were buying at significantly lower prices than today's share price. The chart below shows insider transactions (by individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!
Muscle Maker is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Insider Ownership of Muscle Maker
For a common shareholder, it is worth checking how many shares are held by company insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. From our data, it seems that Muscle Maker insiders own 9.1% of the company, worth about US$1.2m. We do note, however, it is possible insiders have an indirect interest through a private company or other corporate structure. Whilst better than nothing, we're not overly impressed by these holdings.
So What Do The Muscle Maker Insider Transactions Indicate?
The fact that there have been no Muscle Maker insider transactions recently certainly doesn't bother us. But insiders have shown more of an appetite for the stock, over the last year. The transactions are fine but it'd be more encouraging if Muscle Maker insiders bought more shares in the company. So while it's helpful to know what insiders are doing in terms of buying or selling, it's also helpful to know the risks that a particular company is facing. For example, Muscle Maker has 5 warning signs (and 2 which shouldn't be ignored) we think you should know about.
Of course Muscle Maker 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, 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.
