It is not uncommon to see companies perform well in the years after insiders buy shares. On the other hand, we’d be remiss not to mention that insider sales have been known to precede tough periods for a business. So we’ll take a look at whether insiders have been buying or selling shares in Meggitt PLC (LON:MGGT).
What Is Insider Buying?
It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, rules govern insider transactions, and certain disclosures are required.
We don’t think shareholders should simply follow insider transactions. 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.’
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Meggitt Insider Transactions Over The Last Year
Independent Non-Executive Director Colin Day made the biggest insider purchase in the last 12 months. That single transaction was for UK£90k worth of shares at a price of UK£4.49 each. So it’s clear an insider wanted to buy, at around the current price. While their view may have changed since the purchase was made, this does at least suggest they have had confidence in the company’s future. Nonetheless, we consider it positive if insiders want to buy at around the current share price.
Happily, we note that in the last year insiders bought 32.55k shares for a total of UK£145k. In total, Meggitt insiders bought more than they sold over the last year. Their average price was about UK£4.46. It’s great to see insiders putting their own cash into the company’s stock, albeit at below the recent share price (UK£5.14). You can see a visual depiction of insider transactions (by individuals) over the last 12 months, below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
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Are Meggitt Insiders Buying Or Selling?
We’ve only seen a tiny insider purchase valued at UK£424, in the last three months. Looking at the net result, we don’t think these recent trades shed much light on how insiders, as a group, are feeling about the company’s prospects.
Does Meggitt Boast High Insider Ownership?
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. Meggitt insiders own about UK£13m worth of shares. That equates to 0.3% 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.
What Might The Insider Transactions At Meggitt Tell Us?
Our data shows a little more insider buying than selling in the last three months. But overall the difference isn’t worth writing home about. However, our analysis of transactions over the last year is heartening. Insiders do have a stake in Meggitt and their transactions don’t cause us concern. Of course, the future is what matters most. So if you are interested in Meggitt, you should check out this free report on analyst forecasts for the company.
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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 firstname.lastname@example.org.