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 M.D.C. Holdings, Inc. (NYSE:MDC), you may well want to know whether insiders have been buying or selling.
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.
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. For example, a Harvard University study found that 'insider purchases earn abnormal returns of more than 6% per year.
M.D.C. Holdings Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider sale was by the Independent Director, Raymond Baker, for US$637k worth of shares, at about US$42.46 per share. So we know that an insider sold shares at around the present share price of US$38.50. While insider selling is a negative, to us, it is more negative if the shares are sold at a lower price. In this case, the big sale took place at around the current price, so it's not too bad (but it's still not a positive).
Over the last year, we note insiders sold 54531 shares worth US$2.0m. Insiders in M.D.C. Holdings didn't buy any shares in the last year. You can see a visual depiction of insider transactions (by individuals) over the last 12 months, below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
I will like M.D.C. Holdings better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
Insiders at M.D.C. Holdings Have Sold Stock Recently
The last quarter saw substantial insider selling of M.D.C. Holdings shares. Specifically, insiders ditched US$1.5m worth of shares in that time, and we didn't record any purchases whatsoever. Overall this makes us a bit cautious, but it's not the be all and end all.
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. I reckon it's a good sign if insiders own a significant number of shares in the company. M.D.C. Holdings insiders own 11% of the company, currently worth about US$270m based on the recent share price. Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.
So What Does This Data Suggest About M.D.C. Holdings Insiders?
Insiders sold M.D.C. Holdings shares recently, but they didn't buy any. And even if we look to the last year, we didn't see any purchases. But since M.D.C. Holdings is profitable and growing, we're not too worried by this. It is good to see high insider ownership, but the insider selling leaves us cautious. Of course, the future is what matters most. So if you are interested in M.D.C. Holdings, you should check out this free report on analyst forecasts for the company.
Of course M.D.C. Holdings may not be the best stock to buy. So you may wish to see this free collection of high quality 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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