Have Insiders Been Buying McPherson's Limited (ASX:MCP) Shares This Year?

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 before you buy or sell McPherson's Limited (ASX:MCP), you may well want to know whether insiders have been buying or selling.

What Is Insider Buying?

It is perfectly legal for company insiders, including board members, to buy and sell stock in a 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. As Peter Lynch said, 'insiders might sell their shares for any number of reasons, but they buy them for only one: they think the price will rise'.

View our latest analysis for McPherson's

McPherson's Insider Transactions Over The Last Year

In the last twelve months, the biggest single sale by an insider was when the MD, CEO & Executive Director, Laurence McAllister, sold AU$135k worth of shares at a price of AU$2.69 per share. That means that even when the share price was below the current price of AU$2.94, an insider wanted to cash in some shares. When an insider sells below the current price, it suggests that they considered that lower price to be fair. That makes us wonder what they think of the (higher) recent valuation. Please do note, however, that sellers may have a variety of reasons for selling, so we don't know for sure what they think of the stock price. This single sale was 100% of Laurence McAllister's stake.

Happily, we note that in the last year insiders paid AU$306k for 133.50k shares. On the other hand they divested 65.00k shares, for AU$170k. In the last twelve months there was more buying than selling by McPherson's insiders. They paid about AU$2.29 on average. It is certainly positive to see that insiders have invested their own money in the company. However, we do note that they were buying at significantly lower prices than today's share price. The chart below shows insider transactions (by companies and individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!

McPherson's is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.

McPherson's Insiders Bought Stock Recently

Over the last quarter, McPherson's insiders have spent a meaningful amount on shares. Not only was there no selling that we can see, but they collectively bought AU$143k worth of shares. This is a positive in our book as it implies some confidence.

Insider Ownership of McPherson's

I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with insiders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. McPherson's insiders own about AU$17m worth of shares. That equates to 5.3% of the company. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.

What Might The Insider Transactions At McPherson's Tell Us?

It is good to see recent purchasing. We also take confidence from the longer term picture of insider transactions. Insiders likely see value in McPherson's shares, given these transactions (along with notable insider ownership of 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. To assist with this, we've discovered 3 warning signs that you should run your eye over to get a better picture of McPherson's.

Of course McPherson's may not be the best stock to buy. So you may wish to see this free collection of high quality 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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