Stock Analysis

Read This Before Buying MNF Group Limited (ASX:MNF) Shares

  •  Updated
ASX:SYM
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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 before you buy or sell MNF Group Limited (ASX:MNF), you may well want to know whether insiders have been buying or selling.

What Is Insider Selling?

It's quite normal to see company insiders, such as board members, trading in company stock, from time to time. However, such insiders must disclose their trading activities, and not trade on inside information.

We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. 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'.

Check out our latest analysis for MNF Group

MNF Group Insider Transactions Over The Last Year

The Independent Non Executive Director, Michael Boorne, made the biggest insider sale in the last 12 months. That single transaction was for AU$1.5m worth of shares at a price of AU$4.50 each. So it's clear an insider wanted to take some cash off the table, even slightly below the current price of AU$4.56. We generally consider it a negative if insiders have been selling, especially if they did so below the current price, because it implies that they considered a lower price to be reasonable. However, while insider selling is sometimes discouraging, it's only a weak signal. We note that the biggest single sale was only 46% of Michael Boorne's holding.

In the last twelve months insiders purchased 250.00k shares for AU$1.0m. But insiders sold 389.94k shares worth AU$1.8m. All up, insiders sold more shares in MNF Group than they bought, over the last year. The chart below shows insider transactions (by companies and individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

insider-trading-volume
ASX:MNF Insider Trading Volume December 16th 2020

If you like to buy stocks that insiders are buying, rather than selling, then you might just love this free list of companies. (Hint: insiders have been buying them).

Insider Ownership of MNF Group

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. We usually like to see fairly high levels of insider ownership. It appears that MNF Group insiders own 33% of the company, worth about AU$129m. 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 MNF Group Tell Us?

It doesn't really mean much that no insider has traded MNF Group shares in the last quarter. While we feel good about high insider ownership of MNF Group, we can't say the same about the selling of shares. If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its future.

If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, that have HIGH return on equity 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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