We often see insiders buying up shares in companies that perform well over the long term. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So before you buy or sell Morgan Advanced Materials plc (LON:MGAM), you may well want to know whether insiders have been buying or selling.
What Is Insider Selling?
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.
We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. But equally, we would consider it foolish to ignore insider transactions altogether. 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 Morgan Advanced Materials
Over the last year, we can see that the biggest insider purchase was by Non Executive Chairman Douglas Caster for UK£253k worth of shares, at about UK£2.74 per share. That means that an insider was happy to buy shares at around the current price of UK£3.09. While their view may have changed since the purchase was made, this does at least suggest they have had confidence in the company's future. 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. The good news for Morgan Advanced Materials share holders is that insiders were buying at near the current price.
Morgan Advanced Materials insiders may have bought shares in the last year, but they didn't sell any. 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!
There are always plenty of stocks that insiders are buying. So if that suits your style you could check each stock one by one or you could take a look at this free list of companies. (Hint: insiders have been buying them).
Insiders at Morgan Advanced Materials Have Bought Stock Recently
Over the last three months, we've seen significant insider buying at Morgan Advanced Materials. Overall, two insiders shelled out UK£256k for shares in the company -- and none sold. This could be interpreted as suggesting a positive outlook.
Insider Ownership of Morgan Advanced Materials
Many investors like to check how much of a company is owned by insiders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Based on our data, Morgan Advanced Materials insiders have about 0.2% of the stock, worth approximately UK£1.7m. I generally like to see higher levels of ownership.
So What Does This Data Suggest About Morgan Advanced Materials Insiders?
It's certainly positive to see the recent insider purchases. And the longer term insider transactions also give us confidence. On this analysis the only slight negative we see is the fairly low (overall) insider ownership; their transactions suggest that they are quite positive on Morgan Advanced Materials stock. 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.
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.
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 firstname.lastname@example.org. 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.
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