Yahoo Finance Should You Take Comfort From Insider Transactions At McMillan Shakespeare Limited (ASX:MMS)?
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 shareholders might well want to know whether insiders have been buying or selling shares in McMillan Shakespeare Limited (ASX:MMS).
What Is Insider Selling?
It's quite normal to see company insiders, such as board members, trading in company stock, from time to time. However, rules govern insider transactions, and certain disclosures are required.
We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. But logic dictates you should pay some attention to whether insiders are buying or selling shares. 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.
View our latest analysis for McMillan Shakespeare
McMillan Shakespeare Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider purchase was by Independent Non-Executive Director Helen Kurincic for AU$133k worth of shares, at about AU$12.11 per share. We do like to see buying, but this purchase was made at well below the current price of AU$16.11. Because it occurred at a lower valuation, it doesn't tell us much about whether insiders might find today's price attractive.
McMillan Shakespeare insiders may have bought shares in the last year, but they didn't sell any. 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!
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).
Insiders at McMillan Shakespeare Have Bought Stock Recently
Over the last three months, we've seen significant insider buying at McMillan Shakespeare. Not only was there no selling that we can see, but they collectively bought AU$119k worth of shares. That shows some optimism about the company's future.
Insider Ownership of McMillan Shakespeare
Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. 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 McMillan Shakespeare insiders own 5.3% of the company, worth about AU$72m. 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 Do The McMillan Shakespeare Insider Transactions Indicate?
It is good to see recent purchasing. And an analysis of the transactions over the last year also gives us confidence. When combined with notable insider ownership, these factors suggest McMillan Shakespeare insiders are well aligned, and that they may think the share price is too low. Of course, the future is what matters most. So if you are interested in McMillan Shakespeare, you should check out this free report on analyst forecasts for the company.
Of course McMillan Shakespeare 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.
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 editorial-team@simplywallst.com. 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.
