Possible Bearish Signals With MA Financial Group Insiders Disposing Stock

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The fact that multiple MA Financial Group Limited (ASX:MAF) insiders offloaded a considerable amount of shares over the past year could have raised some eyebrows amongst investors. Knowing whether insiders are buying is usually more helpful when evaluating insider transactions, as insider selling can have various explanations. However, shareholders should take a deeper look if several insiders are selling stock over a specific time period.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we would consider it foolish to ignore insider transactions altogether.

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MA Financial Group Insider Transactions Over The Last Year

In the last twelve months, the biggest single sale by an insider was when the Co-Founder & Group Executive Vice Chairman, Andrew Pridham, sold AU$12m worth of shares at a price of AU$5.02 per share. That means that an insider was selling shares at slightly below the current price (AU$8.58). We generally consider it a negative if insiders have been selling, especially if they did so below the current price, because it implies that they considered a lower price to be reasonable. However, while insider selling is sometimes discouraging, it's only a weak signal. This single sale was just 6.9% of Andrew Pridham's stake.

Happily, we note that in the last year insiders paid AU$99k for 13.80k shares. But insiders sold 3.59m shares worth AU$20m. Over the last year we saw more insider selling of MA Financial Group shares, than buying. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. By clicking on the graph below, you can see the precise details of each insider transaction!

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MA Financial Group Insiders Are Selling The Stock

We've seen more insider selling than insider buying at MA Financial Group recently. We note Co-Founder & Group Executive Vice Chairman Andrew Pridham cashed in AU$3.2m worth of shares. On the flip side, insiders spent AU$99k on purchasing shares (as mentioned above) . Since the selling really does outweigh the buying, we'd say that these transactions may suggest that some insiders feel the shares are not cheap.

Insider Ownership Of MA Financial Group

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. It's great to see that MA Financial Group insiders own 27% of the company, worth about AU$378m. This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.

So What Does This Data Suggest About MA Financial Group Insiders?

Unfortunately, there has been more insider selling of MA Financial Group stock, than buying, in the last three months. Despite some insider buying, the longer term picture doesn't make us feel much more positive. But since MA Financial Group is profitable and growing, we're not too worried by this. While insiders do own a lot of shares in the company (which is good), our analysis of their transactions doesn't make us feel confident about the company. So while it's helpful to know what insiders are doing in terms of buying or selling, it's also helpful to know the risks that a particular company is facing. At Simply Wall St, we've found that MA Financial Group has 2 warning signs (1 can't be ignored!) that deserve your attention before going any further with your analysis.

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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.

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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.