Who Has Been Buying Melcor Developments Ltd. (TSE:MRD) Shares?

We've lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. The flip side of that is that there are more than a few examples of insiders dumping stock prior to a period of weak performance. So before you buy or sell Melcor Developments Ltd. (TSE:MRD), 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, rules govern insider transactions, and certain disclosures are required.

We don't think shareholders should simply follow insider transactions. But equally, we would consider it foolish to ignore insider transactions altogether. For example, a Harvard University study found that 'insider purchases earn abnormal returns of more than 6% per year'.

See our latest analysis for Melcor Developments

The Last 12 Months Of Insider Transactions At Melcor Developments

The Chairman Timothy Melton made the biggest insider purchase in the last 12 months. That single transaction was for CA$348k worth of shares at a price of CA$6.95 each. Even though the purchase was made at a significantly lower price than the recent price (CA$9.96), we still think insider buying is a positive. Because it occurred at a lower valuation, it doesn't tell us much about whether insiders might find today's price attractive.

In the last twelve months insiders purchased 160.16k shares for CA$1.1m. On the other hand they divested 3.09k shares, for CA$31k. In total, Melcor Developments insiders bought more than they sold over the last year. 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!

There are always plenty of stocks that insiders are buying. So if that suits your style you could check each stock one by one or you could take a look at this free list of companies. (Hint: insiders have been buying them).

Insiders at Melcor Developments Have Sold Stock Recently

Over the last three months, we've seen a bit of insider selling at Melcor Developments. insider Graeme Melton sold CA$31k worth of shares in that time. But at least we saw CA$4.1k worth of buying. While it's not great to see insider selling, the net amount sold isn't enough for us to want to read anything into it.

Insider Ownership

For a common shareholder, it is worth checking how many shares are held by company insiders. I reckon it's a good sign if insiders own a significant number of shares in the company. Melcor Developments insiders own about CA$39m worth of shares. That equates to 12% 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 Does This Data Suggest About Melcor Developments Insiders?

Insider selling has just outweighed insider buying in the last three months. But the difference is small, and thus, not concerning. However, our analysis of transactions over the last year is heartening. Insiders own shares in Melcor Developments and we see no evidence to suggest they are worried about the future. 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 instance, we've identified 6 warning signs for Melcor Developments (2 are significant) you should be aware of.

But note: Melcor Developments 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 Melcor Developments 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 (at) simplywallst.com.