We’ve lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. 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 shareholders might well want to know whether insiders have been buying or selling shares in Mortgage Choice Limited (ASX:MOC).
What Is Insider Selling?
It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, rules govern insider transactions, and certain disclosures are required.
Insider transactions are not the most important thing when it comes to long-term investing. But it is perfectly logical to keep tabs on what insiders are doing. 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 Mortgage Choice
Over the last year, we can see that the biggest insider purchase was by Independent Non-Executive Director Stephen Jermyn for AU$464k worth of shares, at about AU$0.95 per share. That means that an insider was happy to buy shares at around the current price. Of course they may have changed their mind. But this suggests they are optimistic. Nonetheless, we consider it positive if insiders want to buy at around the current share price.
In the last twelve months insiders paid AU$543k for 545.00k shares purchased. In the last twelve months there was more buying than selling by Mortgage Choice insiders. They paid about AU$1.00 on average. I’d consider this a positive as it suggests insiders see value at around the current price, which is AU$0.97. You can see a visual depiction of insider transactions (by individuals) over the last 12 months, below. By clicking on the graph below, you can see the precise details of each insider transaction!
If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).
Insiders at Mortgage Choice Have Bought Stock Recently
Over the last three months, we’ve seen significant insider buying at Mortgage Choice. We can see that Stephen Jermyn paid AU$464k for shares in the company. No-one sold. This makes one think the business has some good points.
Insider Ownership of Mortgage Choice
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. We usually like to see fairly high levels of insider ownership. Insiders own 17% of Mortgage Choice shares, worth about AU$20m. We’ve certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.
What Might The Insider Transactions At Mortgage Choice Tell Us?
The recent insider purchase is heartening. And the longer term insider transactions also give us confidence. However, we note that the company didn’t make a profit over the last twelve months, which makes us cautious. Insiders likely see value in Mortgage Choice shares, given these transactions (along with notable insider ownership of the company). Of course, the future is what matters most. So if you are interested in Mortgage Choice, you should check out this free report on analyst forecasts for the company.
But note: Mortgage Choice 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.
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