We often see insiders buying up shares in companies that perform well over the long term. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So shareholders might well want to know whether insiders have been buying or selling shares in Mercury NZ Limited (NZSE:MCY).
What Is Insider Selling?
Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock in the company. However, rules govern insider transactions, and certain disclosures are required.
We don’t think shareholders should simply follow insider transactions. But logic dictates you should pay some attention to whether insiders are buying or selling shares. As Peter Lynch said, ‘insiders might sell their shares for any number of reasons, but they buy them for only one: they think the price will rise’.
Mercury NZ Insider Transactions Over The Last Year
The insider, Fraser Whineray, made the biggest insider sale in the last 12 months. That single transaction was for NZ$1.2m worth of shares at a price of NZ$5.14 each. That means that an insider was selling shares at around the current price of NZ$4.77. While insider selling is a negative, to us, it is more negative if the shares are sold at a lower price. In this case, the big sale took place at around the current price, so it’s not too bad (but it’s still not a positive). The only individual insider seller over the last year was Fraser Whineray.
In the last twelve months insiders purchased 66.45k shares for NZ$309k. But insiders sold 233.35k shares worth NZ$1.2m. The chart below shows insider transactions (by companies and individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.
Insiders at Mercury NZ Have Bought Stock Recently
Over the last three months, we’ve seen a bit of insider buying at Mercury NZ. insider Nick Clarke purchased NZ$22k worth of shares in that period. It’s good to see the insider buying, as well as the lack of recent sellers. But in this case the amount purchased means the recent transaction may not be very meaningful on its own.
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. Based on our data, Mercury NZ insiders have about 0.06% of the stock, worth approximately NZ$3.7m. We consider this fairly low insider ownership.
What Might The Insider Transactions At Mercury NZ Tell Us?
Insider purchases may have been minimal, in the last three months, but there was no selling at all. That said, the purchases were not large. The insider transactions at Mercury NZ are not inspiring us to buy. And we’re not picking up on high enough insider ownership to give us any comfort. 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. To help with this, we’ve discovered 3 warning signs (2 shouldn’t be ignored!) that you ought to be aware of before buying any shares in Mercury NZ.
Of course Mercury NZ may not be the best stock to buy. So you may wish to see this free collection of high quality companies.
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.
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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.
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