We often see insiders buying up shares in companies that perform well over the long term. 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 shareholders might well want to know whether insiders have been buying or selling shares in Micro Focus International plc (LON:MCRO).
Do Insider Transactions Matter?
It’s quite normal to see company insiders, such as board members, trading in company stock, from time to time. 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 it is perfectly logical to keep tabs on what insiders are doing. For example, a Harvard University study found that ‘insider purchases earn abnormal returns of more than 6% per year.’
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The Last 12 Months Of Insider Transactions At Micro Focus International
Executive Chairman Kevin Loosemore made the biggest insider purchase in the last 12 months. That single transaction was for UK£203k worth of shares at a price of UK£10.06 each. Although we like to see insider buying, we note that this large purchase was at significantly lower prices. The insider buying may not tell us much about how insiders feel about the current share price.
Over the last year, we can see that insiders have bought 74.07k shares worth UK£764k. In total, Micro Focus International insiders bought more than they sold over the last year. They paid about UK£10.32 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. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).
Does Micro Focus International Boast High Insider Ownership?
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. Micro Focus International insiders own about UK£16m worth of shares. That equates to 0.3% of the company. While this is a strong but not outstanding level of insider ownership, it’s enough to indicate some alignment between management and smaller shareholders.
What Might The Insider Transactions At Micro Focus International Tell Us?
The fact that there have been no Micro Focus International insider transactions recently certainly doesn’t bother us. But insiders have shown more of an appetite for the stock, over the last year. Insiders do have a stake in Micro Focus International and their transactions don’t cause us concern. Therefore, you should should definitely take a look at this FREE report showing analyst forecasts for Micro Focus International.
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.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at email@example.com.