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 before you buy or sell Methode Electronics, Inc. (NYSE:MEI), you may well want to know whether insiders have been buying or selling.
What Is Insider Buying?
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 equally, we would consider it foolish to ignore insider transactions altogether. For example, a Harvard University study found that ‘insider purchases earn abnormal returns of more than 6% per year.
The Last 12 Months Of Insider Transactions At Methode Electronics
Over the last year, we can see that the biggest insider purchase was by President Donald Duda for US$1.7m worth of shares, at about US$23.79 per share. Although we like to see insider buying, we note that this large purchase was at significantly below the recent price of US$37.59. While it does suggest insiders consider the stock undervalued at lower prices, this transaction doesn’t tell us much about what they think of current prices.
Happily, we note that in the last year insiders paid US$2.1m for 86704 shares. On the other hand they divested 1000 shares, for US$23k. In the last twelve months there was more buying than selling by Methode Electronics insiders. 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!
There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of growing companies that insiders are buying.
Methode Electronics Insiders Bought Stock Recently
There was some insider buying at Methode Electronics over the last quarter. Independent Director Bruce Crowther shelled out US$28k for shares in that time. We like it when there are only buyers, and no sellers. However, in this case the amount invested recently is quite small.
Does Methode Electronics Boast High Insider Ownership?
Many investors like to check how much of a company is owned by insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. Methode Electronics insiders own about US$49m worth of shares. That equates to 3.5% of the company. While this is a strong but not outstanding level of insider ownership, it’s enough to indicate some alignment between management and smaller shareholders.
So What Do The Methode Electronics Insider Transactions Indicate?
Insider purchases may have been minimal, in the last three months, but there was no selling at all. Overall the buying isn’t worth writing home about. On a brighter note, the transactions over the last year are encouraging. Insiders do have a stake in Methode Electronics and their transactions don’t cause us concern. Of course, the future is what matters most. So if you are interested in Methode Electronics, you should check out this free report on analyst forecasts for the company.
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.
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.
If you spot an error that warrants correction, please contact the editor at email@example.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.
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