Stock Analysis

Should You Take Comfort From Insider Transactions At Mader Group Limited (ASX:MAD)?

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ASX:MAD
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We often see insiders buying up shares in companies that perform well over the long term. On the other hand, we'd be remiss not to mention that insider sales have been known to precede tough periods for a business. So shareholders might well want to know whether insiders have been buying or selling shares in Mader Group Limited (ASX:MAD).

Do Insider Transactions Matter?

Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock in the company. 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 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'.

See our latest analysis for Mader Group

Mader Group Insider Transactions Over The Last Year

The Non-Executive Director Craig Burton made the biggest insider purchase in the last 12 months. That single transaction was for AU$1.1m worth of shares at a price of AU$0.66 each. We do like to see buying, but this purchase was made at well below the current price of AU$0.91. Because the shares were purchased at a lower price, this particular buy doesn't tell us much about how insiders feel about the current share price.

In the last twelve months Mader Group insiders were buying shares, but not selling. 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!

insider-trading-volume
ASX:MAD Insider Trading Volume March 12th 2021

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.

Mader Group Insiders Bought Stock Recently

Over the last three months, we've seen a bit of insider buying at Mader Group. CEO & Director Justin Nuich purchased AU$49k worth of shares in that period. It's great to see that insiders are only buying, not selling. However, in this case the amount invested recently is quite small.

Does Mader Group Boast High Insider Ownership?

For a common shareholder, it is worth checking how many shares are held by company insiders. We usually like to see fairly high levels of insider ownership. It's great to see that Mader Group insiders own 77% of the company, worth about AU$139m. I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.

So What Do The Mader Group Insider Transactions Indicate?

We note a that there has been a bit of insider buying recently (but no selling). The net investment is not enough to encourage us much. However, our analysis of transactions over the last year is heartening. It would be great to see more insider buying, but overall it seems like Mader Group insiders are reasonably well aligned (owning significant chunk of the company's shares) and optimistic for the future. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. At Simply Wall St, we found 2 warning signs for Mader Group that deserve your attention before buying any shares.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting 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, but not derivative transactions.

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