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We often see insiders buying up shares in companies that perform well over the long term. On the other hand, we'd be remiss not to mention that insider sales have been known to precede tough periods for a business. So shareholders might well want to know whether insiders have been buying or selling shares in Centuria Metropolitan REIT (ASX:CMA).
What Is Insider Buying?
Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock on the market. However, most countries require that the company discloses such transactions to the market.
We don't think shareholders should simply follow insider transactions. 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.'
The Last 12 Months Of Insider Transactions At Centuria Metropolitan REIT
In the last twelve months, the biggest single purchase by an insider was when Director of Centuria Property Funds Limited Roger Dobson bought AU$75k worth of shares at a price of AU$2.43 per share. So it's clear an insider wanted to buy, at around the current price. Of course they may have changed their mind. But this suggests they are optimistic. In any event it's generally a positive if insiders are buying shares at around the current price.
In the last twelve months insiders paid AU$103k for 42.42k shares purchased. In total, Centuria Metropolitan REIT insiders bought more than they sold over the last year. The average buy price was around AU$2.43. It's great to see insiders putting their own cash into the company's stock, albeit at below the recent share price (AU$2.51). You can see the insider transactions (by individuals) over the last year depicted in the chart below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
I will like Centuria Metropolitan REIT better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Our information indicates that Centuria Metropolitan REIT insiders own about AU$1.4m worth of shares. But they may have an indirect interest through a corporate structure that we haven't picked up on. We might be missing something but that seems like very low insider ownership.
So What Do The Centuria Metropolitan REIT Insider Transactions Indicate?
It doesn't really mean much that no insider has traded Centuria Metropolitan REIT shares in the last quarter. However, our analysis of transactions over the last year is heartening. The transactions are fine but it'd be more encouraging if Centuria Metropolitan REIT insiders bought more shares in 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.
But note: Centuria Metropolitan REIT 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.
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 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.