It is usually uneventful when a single insider buys stock. However, When quite a few insiders buy shares, as it happened in Magellan Financial Group Limited’s (ASX:MFG) case, it’s fantastic 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 Magellan Financial Group
Magellan Financial Group Insider Transactions Over The Last Year
In the last twelve months, the biggest single purchase by an insider was when Executive Chairman Andrew Formica bought AU$250k worth of shares at a price of AU$6.24 per share. We do like to see buying, but this purchase was made at well below the current price of AU$8.72. Because it occurred at a lower valuation, it doesn’t tell us much about whether insiders might find today’s price attractive.
While Magellan Financial Group insiders bought shares during the last year, they didn’t sell. They paid about AU$4.21 on average. We don’t deny that it is nice to see insiders buying stock in the company. But we must note that the investments were made at well below today’s share price. You can see a visual depiction of insider transactions (by companies and 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!
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 Magellan Financial Group Have Bought Stock Recently
There was some insider buying at Magellan Financial Group over the last quarter. Independent Non-Executive Director Deborah Page shelled out AU$50k for shares in that time. It’s great to see that insiders are only buying, not selling. But in this case the amount purchased means the recent transaction may not be very meaningful on its own.
Does Magellan Financial Group Boast High Insider Ownership?
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. Magellan Financial Group insiders own about AU$50m worth of shares. That equates to 3.2% 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 Do The Magellan Financial Group Insider Transactions Indicate?
It is good to see the recent insider purchase. And an analysis of the transactions over the last year also gives us confidence. Given that insiders also own a fair bit of Magellan Financial Group we think they are probably pretty confident of a bright future. In addition to knowing about insider transactions going on, it’s beneficial to identify the risks facing Magellan Financial Group. Case in point: We’ve spotted 2 warning signs for Magellan Financial Group you should be aware of, and 1 of these is a bit unpleasant.
Of course Magellan Financial Group 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 of direct interests only, but not derivative transactions or indirect interests.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.
