How Much Are United Malt Group Limited (ASX:UMG) Insiders Spending On Buying Shares?

It is not uncommon to see companies perform well in the years after insiders buy shares. 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 we'll take a look at whether insiders have been buying or selling shares in United Malt Group Limited (ASX:UMG).

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, most countries require that the company discloses such transactions to the market.

We don't think shareholders should simply follow insider transactions. 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 United Malt Group

The Last 12 Months Of Insider Transactions At United Malt Group

Over the last year, we can see that the biggest insider purchase was by MD, CEO & Director Mark Palmquist for AU$402k worth of shares, at about AU$4.11 per share. So it's clear an insider wanted to buy, at around the current price, which is AU$4.18. Of course they may have changed their mind. But this suggests they are optimistic. 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 United Malt Group insiders decided to buy shares at close to current prices.

United Malt Group insiders may have bought shares in the last year, but they didn't sell any. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

There are always plenty of stocks that insiders are buying. So if that suits your style you could check each stock one by one or you could take a look at this free list of companies. (Hint: insiders have been buying them).

United Malt Group Insiders Bought Stock Recently

There was some insider buying at United Malt Group over the last quarter. Independent Non-Executive Director Terry Williamson shelled out AU$22k for shares in that time. It's great to see that insiders are only buying, not selling. However, in this case the amount invested recently is quite small.

Insider Ownership of United Malt 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. A high insider ownership often makes company leadership more mindful of shareholder interests. From our data, it seems that United Malt Group insiders own 0.6% of the company, worth about AU$7.5m. Whilst better than nothing, we're not overly impressed by these holdings.

So What Do The United Malt Group Insider Transactions Indicate?

Our data shows a little insider buying, but no selling, in the last three months. Overall the buying isn't worth writing home about. On a brighter note, the transactions over the last year are encouraging. The transactions are fine but it'd be more encouraging if United Malt Group insiders bought more shares in the company. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing United Malt Group. In terms of investment risks, we've identified 1 warning sign with United Malt Group and understanding it should be part of your investment process.

But note: United Malt Group 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.

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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