How Much Are Matrix Composites & Engineering Ltd (ASX:MCE) Insiders Spending On Buying Shares?

It is not uncommon to see companies perform well in the years after insiders buy shares. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So shareholders might well want to know whether insiders have been buying or selling shares in Matrix Composites & Engineering Ltd (ASX:MCE).

What Is Insider Buying?

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, rules govern insider transactions, and certain disclosures are required.

We don't think shareholders should simply follow insider transactions. But it is perfectly logical to keep tabs on what insiders are doing. For example, a Columbia University study found that 'insiders are more likely to engage in open market purchases of their own company’s stock when the firm is about to reveal new agreements with customers and suppliers'.

See our latest analysis for Matrix Composites & Engineering

Matrix Composites & Engineering Insider Transactions Over The Last Year

In the last twelve months, the biggest single purchase by an insider was when MD, CEO & Director Aaron Begley bought AU$421k worth of shares at a price of AU$0.16 per share. So it's clear an insider wanted to buy, at around the current price, which is AU$0.17. That means they have been optimistic about the company in the past, though they may have changed their mind. We do always like to see insider buying, but it is worth noting if those purchases were made at well below today's share price, as the discount to value may have narrowed with the rising price. Happily, the Matrix Composites & Engineering insiders decided to buy shares at close to current prices.

In the last twelve months Matrix Composites & Engineering insiders were buying shares, but not selling. The chart below shows insider transactions (by companies and individuals) over the last year. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

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.

Does Matrix Composites & Engineering 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. Matrix Composites & Engineering insiders own 45% of the company, currently worth about AU$7.7m based on the recent share price. Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.

So What Do The Matrix Composites & Engineering Insider Transactions Indicate?

It doesn't really mean much that no insider has traded Matrix Composites & Engineering shares in the last quarter. But insiders have shown more of an appetite for the stock, over the last year. With high insider ownership and encouraging transactions, it seems like Matrix Composites & Engineering insiders think the business has merit. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Matrix Composites & Engineering. Our analysis shows 2 warning signs for Matrix Composites & Engineering (1 can't be ignored!) and we strongly recommend you look at these before investing.

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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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. 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.
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