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We've lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. 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 Murray River Organics Group Limited (ASX:MRG).
What Is Insider Selling?
It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, most countries require that the company discloses such transactions to the market.
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 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'.
The Last 12 Months Of Insider Transactions At Murray River Organics Group
Over the last year, we can see that the biggest insider purchase was by Non-Executive Independent Director Paul McDonald for AU$300k worth of shares, at about AU$0.012 per share. That means that even when the share price was higher than AU$0.01 (the recent price), an insider wanted to purchase shares. Their view may have changed since then, but at least it shows they felt optimistic at the time. To us, it's very important to consider the price insiders pay for shares. Generally speaking, it catches our eye when insiders have purchased shares at above current prices, as it suggests they believed the shares were worth buying, even at a higher price.
While Murray River Organics Group insiders bought shares during the last year, they didn't sell. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
Murray River Organics Group is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Murray River Organics Group Insiders Bought Stock Recently
It's good to see that Murray River Organics Group insiders have made notable investments in the company's shares. Overall, three insiders shelled out AU$351k for shares in the company -- and none sold. That shows some optimism about the company's future.
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. Based on our data, Murray River Organics Group insiders have about 3.7% of the stock, worth approximately AU$821k. But they may have an indirect interest through a corporate structure that we haven't picked up on. We consider this fairly low insider ownership.
So What Does This Data Suggest About Murray River Organics Group Insiders?
The recent insider purchases are heartening. And the longer term insider transactions also give us confidence. But we don't feel the same about the fact the company is making losses. We would certainly prefer see higher levels of insider ownership but analysis of the insider transactions suggests that Murray River Organics Group insiders are expecting a bright future. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Murray River Organics Group. To that end, you should learn about the 5 warning signs we've spotted with Murray River Organics Group (including 3 which shouldn't be ignored).
But note: Murray River Organics Group 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.
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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