Mothercare Decline Means Insider Profits Down To UK£16k

Insiders who bought Mothercare plc (LON:MTC) in the last 12 months may probably not pay attention to the stock's recent 10% drop. After accounting for the recent loss, the UK£47.3k worth of shares they purchased is now worth UK£62.9k, suggesting a good return on their investment.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, logic dictates you should pay some attention to whether insiders are buying or selling shares.

See our latest analysis for Mothercare

Mothercare Insider Transactions Over The Last Year

The Non-Executive Chairman Clive Whiley made the biggest insider purchase in the last 12 months. That single transaction was for UK£47k worth of shares at a price of UK£0.05 each. We do like to see buying, but this purchase was made at well below the current price of UK£0.067. Because it occurred at a lower valuation, it doesn't tell us much about whether insiders might find today's price attractive.

You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. By clicking on the graph below, you can see the precise details of each insider transaction!

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.

Insider Ownership Of Mothercare

Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Insiders own 15% of Mothercare shares, worth about UK£5.6m. We've certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.

So What Does This Data Suggest About Mothercare Insiders?

It doesn't really mean much that no insider has traded Mothercare shares in the last quarter. However, our analysis of transactions over the last year is heartening. Insiders own shares in Mothercare and we see no evidence to suggest they are worried about the future. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. For instance, we've identified 6 warning signs for Mothercare (3 are a bit concerning) you should be aware of.

But note: Mothercare 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.