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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 Western Asset Mortgage Capital Corporation (NYSE:WMC), you may well want to know whether insiders have been buying or selling.
What Is Insider Selling?
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, rules govern insider transactions, and certain disclosures are required.
We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. But it is perfectly logical to keep tabs on what insiders are doing. For example, a Columbia University study found that ‘insiders are more likely to engage in open market purchases of their own company’s stock when the firm is about to reveal new agreements with customers and suppliers’.
The Last 12 Months Of Insider Transactions At Western Asset Mortgage Capital
In the last twelve months, the biggest single purchase by an insider was when President Jennifer Murphy bought US$100k worth of shares at a price of US$10.04 per share. That means that an insider was happy to buy shares at above the current price. It’s very possible they regret the purchase, but it’s more likely they are bullish about the company. That purchase may suggest an expectation of positive returns over the long term.
Happily, we note that in the last year insiders bought 10.73k shares for a total of US$107k. Overall, Western Asset Mortgage Capital insiders were net buyers last year. They paid about US$9.97 on average. These transactions suggest that insiders have considered the current price of US$9.90 attractive. 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!
Western Asset Mortgage Capital is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Have Western Asset Mortgage Capital Insiders Traded Recently?
There was some insider buying at Western Asset Mortgage Capital over the last quarter. CFO & Treasurer Lisa Meyer bought US$5.6k worth of shares in that time. It’s great to see that insiders are only buying, not selling. However, in this case the amount invested recently is quite small.
Insider Ownership of Western Asset Mortgage Capital
For a common shareholder, it is worth checking how many shares are held by company insiders. We usually like to see fairly high levels of insider ownership. Based on our data, Western Asset Mortgage Capital insiders have about 0.4% of the stock, worth approximately US$2.1m. I generally like to see higher levels of ownership.
So What Does This Data Suggest About Western Asset Mortgage Capital Insiders?
Insider purchases have outweighed sales, in the last three months. But the net investment is not enough to encourage us much. However, our analysis of transactions over the last year is heartening. We’d like to see bigger individual holdings. However, we don’t see anything to make us think Western Asset Mortgage Capital insiders are doubting 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: Western Asset Mortgage Capital 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.
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.