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 Martin Marietta Materials, Inc. (NYSE:MLM).
What Is Insider Selling?
It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. 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 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.
Martin Marietta Materials Insider Transactions Over The Last Year
In the last twelve months, the biggest single sale by an insider was when the insider, Donald McCunniff, sold US$422k worth of shares at a price of US$191 per share. That means that even when the share price was below the current price of US$274, an insider wanted to cash in some shares. We generally consider it a negative if insiders have been selling, especially if they did so below the current price, because it implies that they considered a lower price to be reasonable. However, while insider selling is sometimes discouraging, it's only a weak signal. We note that the biggest single sale was only 14% of Donald McCunniff's holding.
Over the last year we saw more insider selling of Martin Marietta Materials shares, than buying. The chart below shows insider transactions (by individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
I will like Martin Marietta Materials better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
Does Martin Marietta Materials Boast High Insider Ownership?
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. A high insider ownership often makes company leadership more mindful of shareholder interests. Martin Marietta Materials insiders own about US$102m worth of shares (which is 0.6% of the company). 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 Martin Marietta Materials Insiders?
It doesn't really mean much that no insider has traded Martin Marietta Materials shares in the last quarter. It's heartening that insiders own plenty of stock, but we'd like to see more insider buying, since the last year of Martin Marietta Materials insider transactions don't fill us with confidence. Of course, the future is what matters most. So if you are interested in Martin Marietta Materials, you should check out this free report on analyst forecasts for the company.
Of course Martin Marietta Materials 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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