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It is not uncommon to see companies perform well in the years after insiders buy shares. 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 MKS Instruments, Inc. (NASDAQ:MKSI).
What Is Insider Buying?
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.
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. As Peter Lynch said, ‘insiders might sell their shares for any number of reasons, but they buy them for only one: they think the price will rise.’
MKS Instruments Insider Transactions Over The Last Year
In the last twelve months, the biggest single sale by an insider was when Secretary & Director Richard Chute sold US$220k worth of shares at a price of US$111 per share. Although we don’t gain confidence from insider selling, we note that this large sale was at well above current price of US$90.77. So it may not shed much light on insider confidence at current levels.
We note that in the last year insiders divested 5.38k shares for a total of US$576k. In total, MKS Instruments insiders sold more than they bought over the last year. They sold for an average price of about US$107. It’s not ideal to see that insiders have sold at around the current price of US$90.77. But we don’t put too much weight on the insider selling, since sellers could have personal reasons. 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!
For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. I reckon it’s a good sign if insiders own a significant number of shares in the company. MKS Instruments insiders own about US$56m worth of shares. That equates to 1.1% of the company. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.
So What Does This Data Suggest About MKS Instruments Insiders?
The fact that there have been no MKS Instruments insider transactions recently certainly doesn’t bother us. Still, the insider transactions at MKS Instruments in the last 12 months are not very heartening. But it’s good to see that insiders own shares in the company. Of course, the future is what matters most. So if you are interested in MKS Instruments, you should check out this free report on analyst forecasts for the company.
Of course MKS Instruments may not be the best stock to buy. So you may wish to see this free collection of high quality companies.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
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. Thank you for reading.