Have Insiders Been Buying Mitchell Services Limited (ASX:MSV) Shares?

It is not uncommon to see companies perform well in the years after insiders buy shares. 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 Mitchell Services Limited (ASX:MSV).

What Is Insider Selling?

It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, rules govern insider transactions, and certain disclosures are required.

We don't think shareholders should simply follow insider transactions. But logic dictates you should pay some attention to whether insiders are buying or selling shares. For example, a Harvard University study found that 'insider purchases earn abnormal returns of more than 6% per year'.

See our latest analysis for Mitchell Services

The Last 12 Months Of Insider Transactions At Mitchell Services

In the last twelve months, the biggest single purchase by an insider was when Executive Chairman Nathan Mitchell bought AU$103k worth of shares at a price of AU$0.46 per share. That implies that an insider found the current price of AU$0.53 per share to be enticing. While their view may have changed since the purchase was made, this does at least suggest they have had confidence in the company's future. If someone buys shares at well below current prices, it's a good sign on balance, but keep in mind they may no longer see value. In this case we're pleased to report that the insider bought shares at close to current prices. The only individual insider to buy over the last year was Nathan Mitchell.

Nathan Mitchell purchased 351.32k shares over the year. The average price per share was AU$0.47. 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!

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

Insiders at Mitchell Services Have Sold Stock Recently

Over the last three months, we've seen a bit of insider selling at Mitchell Services. Alternate Director Grant Moyle divested only AU$52k worth of shares in that time. It's not great to see insider selling, nor the lack of recent buyers. But the selling simply isn't sufficiently substantial to be of much use as a signal.

Insider Ownership of Mitchell Services

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. Mitchell Services insiders own about AU$36m worth of shares. That equates to 35% 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.

So What Do The Mitchell Services Insider Transactions Indicate?

An insider sold stock recently, but they haven't been buying. On the other hand, the insider transactions over the last year are encouraging. It's good to see insiders are shareholders. So we're happy enough to look past some selling. 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. For example - Mitchell Services has 4 warning signs we think you should be aware of.

But note: Mitchell Services 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.

When trading Mitchell Services or any other investment, use the platform considered by many to be the Professional's Gateway to the Worlds Market, Interactive Brokers. You get the lowest-cost* trading on stocks, options, futures, forex, bonds and funds worldwide from a single integrated account. Promoted

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.
^*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.