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 we’ll take a look at whether insiders have been buying or selling shares in Mondi plc (LON:MNDI).
What Is Insider Buying?
Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock on the market. 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. For example, a Columbia University study found that ‘insiders are more likely to engage in open market purchases of their own company’s stock when the firm is about to reveal new agreements with customers and suppliers’.
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Mondi Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider sale was by CEO & Executive Director Peter Oswald for UK£287k worth of shares, at about UK£19.81 per share. So what is clear is that an insider saw fit to sell at around the current price of UK£18.23. They might be selling for a variety of reasons, but it’s hard to argue this is a bullish sign. We usually pause to reflect on the potential that a stock has a high valuation, if insiders have been selling at around the current price. Notably Peter Oswald was also the biggest buyer, having purchased UK£80k worth of shares.
All up, insiders sold more shares in Mondi than they bought, over the last year. The sellers received a price of around €19.81, on average. It’s not too encouraging to see that insiders have sold at below the current price. Since insiders sell for many reasons, we wouldn’t put too much weight on it. 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!
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Insiders at Mondi Have Bought Stock Recently
Over the last three months, we’ve seen significant insider buying at Mondi. Specifically, Peter Oswald bought €80k worth of shares in that time, and we didn’t record any sales whatsoever. This makes one think the business has some good points.
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. It appears that Mondi insiders own 0.1% of the company, worth about UK£8.4m. While this is a strong but not outstanding level of insider ownership, it’s enough to indicate some alignment between management and smaller shareholders.
What Might The Insider Transactions At Mondi Tell Us?
It’s certainly positive to see the recent insider purchase. On the other hand the transaction history, over the last year, isn’t so positive. The transactions over the last year don’t give us confidence, and nor does the fairly low insider ownership, but at least the recent buying is a positive. Therefore, you should should definitely take a look at this FREE report showing analyst forecasts for Mondi.
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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.