We've lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. 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 MGP Ingredients, Inc. (NASDAQ:MGPI).
What Is Insider Buying?
It's quite normal to see company insiders, such as board members, trading in company stock, from time to time. 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 it is perfectly logical to keep tabs on what insiders are doing. 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.
MGP Ingredients Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider sale was by the insider, David Dykstra, for US$411k worth of shares, at about US$82.18 per share. While insider selling is a negative, to us, it is more negative if the shares are sold at a lower price. The good news is that this large sale was at well above current price of US$45.00. So it may not shed much light on insider confidence at current levels.
Over the last year, we can see that insiders have bought 5475 shares worth US$288k. But they sold 6546 for US$531k. In total, MGP Ingredients insiders sold more than they bought over the last year. The sellers received a price of around US$81.13, on average. We are not joyful about insider selling. But the selling was at much higher prices than the current share price (US$45.00), so it probably doesn't tell us a lot about the value on offer today. You can see a visual depiction of insider transactions (by individuals) over the last 12 months, below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
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 MGP Ingredients Have Bought Stock Recently
Over the last three months, we've seen significant insider buying at MGP Ingredients. Specifically, CEO, President & Director Augustus Griffin bought US$119k 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.
Insider Ownership of MGP Ingredients
I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with insiders. We usually like to see fairly high levels of insider ownership. Insiders own 7.5% of MGP Ingredients shares, worth about US$57m. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.
What Might The Insider Transactions At MGP Ingredients Tell Us?
It's certainly positive to see the recent insider purchase. On the other hand the transaction history, over the last year, isn't so positive. The more recent transactions are a positive, but MGP Ingredients insiders haven't shown the sustained enthusiasm that we look for, although they do own a decent number of shares, overall. So they seem pretty well aligned, overall. 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.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting 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.
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If you spot an error that warrants correction, please contact the editor at email@example.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.