Should You Be Worried About Insider Transactions At Magna International Inc. (TSE:MG)?

Simply Wall St
December 23, 2018
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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 Magna International Inc. (TSE:MG).

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.

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

The Last 12 Months Of Insider Transactions At Magna International

In the last twelve months, the biggest single sale by an insider was when Executive VP & CFO Vincent Galifi sold CA$8.3m worth of shares at a price of CA$84.20 per share. That is hardly a positive sign, even though it took place above the latest price (CA$61.54). So it may not shed much light on insider confidence at current levels.

In total, Magna International insiders sold more than they bought over the last year. The average sell price was around US$75.42. It's not ideal to see that insiders have sold at around the current price of CA$61.54. Since insiders sell for many reasons, we wouldn't put too much weight on it. You can see the insider transactions 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!

TSX:MG Insider Trading December 23rd 18
TSX:MG Insider Trading December 23rd 18

I will like Magna International better if I see some big insider buys. While we wait, check out this freelist of growing companies with considerable, recent, insider buying.

Insider Ownership of Magna International

For a common shareholder, it is worth checking how many shares are held by company insiders. We usually like to see fairly high levels of insider ownership. It's great to see that Magna International insiders own 1.1% of the company, worth about CA$221m. I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.

So What Does This Data Suggest About Magna International Insiders?

The fact that there have been no Magna International insider transactions recently certainly doesn't bother us. While we feel good about high insider ownership of Magna International, we can't say the same about the selling of shares. Of course, the future is what matters most. So if you are interested in Magna International, you should check out this freereport on analyst forecasts for the company.

But note: Magna International may not be the best stock to buy. So take a peek at this freelist of interesting companies with high ROE and low debt.

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at

Simply Wall St analyst Simply Wall St and Simply Wall St have no position in any of the companies mentioned. This article is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.

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