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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 we'll take a look at whether insiders have been buying or selling shares in Morguard North American Residential Real Estate Investment Trust (TSE:MRG.UN).
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 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'.
The Last 12 Months Of Insider Transactions At Morguard North American Residential Real Estate Investment Trust
Over the last year, we can see that the biggest insider purchase was by Independent Trustee Bruce Robertson for CA$182k worth of shares, at about CA$15.01 per share. Even though the purchase was made at a significantly lower price than the recent price (CA$17.50), we still think insider buying is a positive. Because the shares were purchased at a lower price, this particular buy doesn't tell us much about how insiders feel about the current share price.
The chart below shows insider transactions (by companies and individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!
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).
Morguard North American Residential Real Estate Investment Trust Insiders Are Selling The Stock
Over the last three months, we've seen significant insider selling at Morguard North American Residential Real Estate Investment Trust. Specifically, Senior Vice President Paul Miatello ditched CA$70k worth of shares in that time, and we didn't record any purchases whatsoever. This may suggest that some insiders think that the shares are not cheap.
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. It appears that Morguard North American Residential Real Estate Investment Trust insiders own 2.3% of the company, worth about CA$22m. 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 Morguard North American Residential Real Estate Investment Trust Insiders?
An insider sold Morguard North American Residential Real Estate Investment Trust shares recently, but they didn't buy any. On the other hand, the insider transactions over the last year are encouraging. We like that insiders own a fair amount of the company. So we're not overly bothered by recent selling. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Morguard North American Residential Real Estate Investment Trust. When we did our research, we found 5 warning signs for Morguard North American Residential Real Estate Investment Trust (1 shouldn't be ignored!) that we believe deserve your full attention.
Of course Morguard North American Residential Real Estate Investment Trust 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.
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. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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