Stock Analysis

Are Insiders Buying MotorCycle Holdings Limited (ASX:MTO) Stock?

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ASX:MTO
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We've lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So we'll take a look at whether insiders have been buying or selling shares in MotorCycle Holdings Limited (ASX:MTO).

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 Harvard University study found that 'insider purchases earn abnormal returns of more than 6% per year'.

Check out our latest analysis for MotorCycle Holdings

MotorCycle Holdings Insider Transactions Over The Last Year

The Co-Founder David Ahmet made the biggest insider purchase in the last 12 months. That single transaction was for AU$7.6m worth of shares at a price of AU$1.20 each. We do like to see buying, but this purchase was made at well below the current price of AU$2.33. While it does suggest insiders consider the stock undervalued at lower prices, this transaction doesn't tell us much about what they think of current prices.

Happily, we note that in the last year insiders paid AU$8.0m for 6.67m shares. But insiders sold 6.30m shares worth AU$7.6m. Overall, MotorCycle Holdings insiders were net buyers during the last year. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

insider-trading-volume
ASX:MTO Insider Trading Volume December 8th 2020

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.

Insiders at MotorCycle Holdings Have Bought Stock Recently

Over the last three months, we've seen a bit of insider buying at MotorCycle Holdings. Independent Non-Executive Director Peter Henley purchased AU$15k worth of shares in that period. It's great to see that insiders are only buying, not selling. However, in this case the amount invested recently is quite small.

Does MotorCycle Holdings Boast High Insider Ownership?

For a common shareholder, it is worth checking how many shares are held by company insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. It appears that MotorCycle Holdings insiders own 36% of the company, worth about AU$53m. We've certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.

What Might The Insider Transactions At MotorCycle Holdings Tell Us?

Our data shows a little insider buying, but no selling, in the last three months. Overall the buying isn't worth writing home about. But insiders have shown more of an appetite for the stock, over the last year. Overall we don't see anything to make us think MotorCycle Holdings insiders are doubting the company, and they do own shares. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. To assist with this, we've discovered 1 warning sign that you should run your eye over to get a better picture of MotorCycle Holdings.

Of course MotorCycle Holdings 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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