When a single insider purchases stock, it is typically not a major deal. However, when multiple insiders purchase stock, like in Melcor Developments Ltd.’s (TSE:MRD) instance, it’s good news for shareholders.
While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we do think it is perfectly logical to keep tabs on what insiders are doing.
Check out our latest analysis for Melcor Developments
Melcor Developments Insider Transactions Over The Last Year
In the last twelve months, the biggest single purchase by an insider was when CEO & Executive Chairman Timothy Melton bought CA$371k worth of shares at a price of CA$12.35 per share. That means that even when the share price was higher than CA$11.80 (the recent price), an insider wanted to purchase shares. It’s very possible they regret the purchase, but it’s more likely they are bullish about the company. In our view, the price an insider pays for shares is very important. As a general rule, we feel more positive about a stock if insiders have bought shares at above current prices, because that suggests they viewed the stock as good value, even at a higher price.
Over the last year, we can see that insiders have bought 145.15k shares worth CA$1.8m. On the other hand they divested 9.39k shares, for CA$130k. In the last twelve months there was more buying than selling by Melcor Developments insiders. 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!
Melcor Developments is not the only stock that insiders are buying. For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.
Insiders At Melcor Developments Have Bought Stock Recently
At Melcor Developments,over the last quarter, we have observed quite a lot more insider buying than insider selling. Insiders spent CA$558k on shares. On the other hand, insiders netted CA$54k by selling. The buying outweighs the selling, which suggests that insiders may believe the company will do well in the future.
Does Melcor Developments Boast High Insider Ownership?
For a common shareholder, it is worth checking how many shares are held by company insiders. I reckon it’s a good sign if insiders own a significant number of shares in the company. It appears that Melcor Developments insiders own 13% of the company, worth about CA$47m. 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 Melcor Developments Tell Us?
It is good to see recent purchasing. And the longer term insider transactions also give us confidence. When combined with notable insider ownership, these factors suggest Melcor Developments insiders are well aligned, and that they may think the share price is too low. So while it’s helpful to know what insiders are doing in terms of buying or selling, it’s also helpful to know the risks that a particular company is facing. For instance, we’ve identified 3 warning signs for Melcor Developments (2 are a bit concerning) you should be aware of.
But note: Melcor Developments may not be the best stock to buy. So take a peek at this free list of interesting companies with high ROE and low debt.
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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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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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