How Confident Are Insiders About MPC Container Ships ASA (OB:MPCC)?

MPC Container Ships ASA owns and operates container ships. MPC Container Ships is one of Norway’s large-cap stocks that saw some insider buying over the past three months, with insiders investing in 290,360 shares during this period. Generally, insiders buying more shares in their own firm sends a bullish signal. A research published in The MIT Press (1998) concluded that stocks following insider buying outperformed the market by 4.5%. However, it may not be sufficient to base your investment decision merely on these signals. Today we will evaluate whether these decisions are bolstered by analysts’ expectations of future growth as well as recent share price movements.

Check out our latest analysis for MPC Container Ships

Which Insiders Are Buying?

OB:MPCC Insider_trading Jun 7th 18
OB:MPCC Insider_trading Jun 7th 18
Over the past three months, more shares have been bought than sold by MPC Container Ships’s’ insiders. In total, individual insiders own over 11 million shares in the business, which makes up around 14.61% of total shares outstanding. The entity that bought on the open market in the last three months was Pelerin Global Corp. Although this is an institutional investor, rather than a company executive or board member, the insights gained from direct access to management as a large investor would make it more well-informed than the average retail investor. In this specific instance, I would classify this investor as a company insider.

Is This Consistent With Future Growth?

OB:MPCC Future Profit Jun 7th 18
OB:MPCC Future Profit Jun 7th 18

To the outsider, MPC Container Ships’s future looks bright. Delving deeper into the line items,MPC Container Ships is expected to experience an impressive double-digit top-line growth next year, which This could be anticipated by insiders given their positive signal of net buying activity. However, they may merely believe the market has overly-discounted share price which provides an opportune time to buy.

Can Share Price Volatility Explain The Buy?

Another factor we should consider is whether the timing of these insider transactions coincide with any significant share price movements. Volatility provides an opportunity to trade on market inefficiencies when the stock is under-priced compared to the stock’s intrinsic value. In the past three months, MPC Container Ships’s share price reached a high of NOK56 and a low of NOK47.8. This suggests some volatility with a share price change of of 17.15%. Insiders’ purchases may not be driven by this movement but perhaps their view of the company’s growth in the future or simply their individual portfolio rebalancing.

Next Steps:

MPC Container Ships’s net buying tells us the stock is in favour with some insiders, which is relatively consistent with expected earnings growth, although the share price has not moved significantly to warrant reassessment of mispricing. However, while insider transactions could be a helpful signal, it is definitely not sufficient on its own to make an investment decision. I’ve put together two relevant aspects you should look at:

  1. Financial Health: Does MPC Container Ships have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
  2. Other High Quality Alternatives : Are there other high quality stocks you could be holding instead of MPC Container Ships? Explore our interactive list of high quality stocks to get an idea of what else is out there you may be missing!
NB: Figures in this article are calculated using data from the last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. This may not be consistent with full year annual report figures.

The easiest way to discover new investment ideas

Save hours of research when discovering your next investment with Simply Wall St. Looking for companies potentially undervalued based on their future cash flows? Or maybe you’re looking for sustainable dividend payers or high growth potential stocks. Customise your search to easily find new investment opportunities that match your investment goals. And the best thing about it? It’s FREE. Click here to learn more.