Want to participate in a research study? Help shape the future of investing tools and earn a $60 gift card!
We often see insiders buying up shares in companies that perform well over the long term. The flip side of that is that there are more than a few examples of insiders dumping stock prior to a period of weak performance. So we'll take a look at whether insiders have been buying or selling shares in MEC Resources Limited (ASX:MMR).
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, such insiders must disclose their trading activities, and not trade on inside information.
Insider transactions are not the most important thing when it comes to long-term investing. But logic dictates you should pay some attention to whether insiders are buying or selling shares. For example, a Harvard University study found that 'insider purchases earn abnormal returns of more than 6% per year.'
MEC Resources Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider sale was by David Breeze for AU$98k worth of shares, at about AU$0.017 per share. While the sale doesn't make us feel confident, we do note it was conducted at a price well above the current share price, which is AU$0.008. So it is hard to draw any strong conclusion from it. The only individual insider seller over the last year was David Breeze. Notably David Breeze was also the biggest buyer, having purchased AU$90k worth of shares.
You can see a visual depiction of insider transactions (by individuals) over the last 12 months, below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
I will like MEC Resources better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
Does MEC Resources Boast High Insider Ownership?
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. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. MEC Resources insiders own about AU$643k worth of shares. That equates to 24% 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.
So What Does This Data Suggest About MEC Resources Insiders?
The fact that there have been no MEC Resources insider transactions recently certainly doesn't bother us. We don't take much encouragement from the transactions by MEC Resources insiders. But it's good to see that insiders own shares in the company. I like to dive deeper into how a company has performed in the past. You can find historic revenue and earnings in this detailed graph.
If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, that have HIGH return on equity and low debt.
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 firstname.lastname@example.org. 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.