Possible Bearish Signals With MEG Energy Insiders Disposing Stock

The fact that multiple MEG Energy Corp. (TSE:MEG) insiders offloaded a considerable amount of shares over the past year could have raised some eyebrows amongst investors. Knowing whether insiders are buying is usually more helpful when evaluating insider transactions, as insider selling can have various explanations. However, if numerous insiders are selling, shareholders should investigate more.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we do think it is perfectly logical to keep tabs on what insiders are doing.

Check out our latest analysis for MEG Energy

MEG Energy Insider Transactions Over The Last Year

The insider, Derek Evans, made the biggest insider sale in the last 12 months. That single transaction was for CA$8.9m worth of shares at a price of CA$28.58 each. We generally don't like to see insider selling, but the lower the sale price, the more it concerns us. It's of some comfort that this sale was conducted at a price well above the current share price, which is CA$24.86. So it may not shed much light on insider confidence at current levels.

Happily, we note that in the last year insiders paid CA$325k for 12.40k shares. On the other hand they divested 500.10k shares, for CA$14m. Over the last year we saw more insider selling of MEG Energy shares, than buying. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. By clicking on the graph below, you can see the precise details of each insider transaction!

For those who like to find hidden gems this free list of small cap companies with recent insider purchasing, could be just the ticket.

MEG Energy Insiders Bought Stock Recently

It's good to see that MEG Energy insiders have made notable investments in the company's shares. In total, insiders bought CA$325k worth of shares in that time, and we didn't record any sales whatsoever. This is a positive in our book as it implies some confidence.

Insider Ownership Of MEG Energy

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. I reckon it's a good sign if insiders own a significant number of shares in the company. It appears that MEG Energy insiders own 0.4% of the company, worth about CA$26m. 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 MEG Energy Tell Us?

It is good to see recent purchasing. On the other hand the transaction history, over the last year, isn't so positive. The more recent transactions are a positive, but MEG Energy insiders haven't shown the sustained enthusiasm that we look for, although they do own a decent number of shares, overall. Overall they seem reasonably aligned. 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. Case in point: We've spotted 1 warning sign for MEG Energy you should be aware of.

But note: MEG Energy 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 of direct interests only, but not derivative transactions or indirect interests.

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This article by Simply Wall St 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. Simply Wall St has no position in any stocks mentioned.