Insiders at Maha Energy AB (publ) (STO:MAHA A) sold US$6.0m worth of stock, a potential red flag that needs to be monitored

Simply Wall St
September 07, 2021
Source: Shutterstock

While it’s been a great week for Maha Energy AB (publ) (STO:MAHA A) shareholders after stock gained 13%, they should consider it with a grain of salt. Even though stock prices were relatively low, insiders elected to sell US$6.0m worth of stock in the last year, which could indicate some expected downturn.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we would consider it foolish to ignore insider transactions altogether.

View our latest analysis for Maha Energy

Maha Energy Insider Transactions Over The Last Year

The Independent Director, Anders Ehrenblad, made the biggest insider sale in the last 12 months. That single transaction was for kr2.3m worth of shares at a price of kr13.00 each. That means that even when the share price was below the current price of kr13.50, an insider wanted to cash in some shares. As a general rule we consider it to be discouraging when insiders are selling below the current price, because it suggests they were happy with a lower valuation. While insider selling is not a positive sign, we can't be sure if it does mean insiders think the shares are fully valued, so it's only a weak sign. We note that the biggest single sale was only 28% of Anders Ehrenblad's holding.

Over the last year we saw more insider selling of Maha Energy shares, than buying. The chart below shows insider transactions (by companies and individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!

OM:MAHA A Insider Trading Volume September 8th 2021

If you like to buy stocks that insiders are buying, rather than selling, then you might just love this free list of companies. (Hint: insiders have been buying them).

Does Maha Energy Boast High Insider Ownership?

Many investors like to check how much of a company is owned by insiders. We usually like to see fairly high levels of insider ownership. Insiders own 9.1% of Maha Energy shares, worth about kr147m. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.

What Might The Insider Transactions At Maha Energy Tell Us?

It doesn't really mean much that no insider has traded Maha Energy shares in the last quarter. It's great to see high levels of insider ownership, but looking back over the last year, we don't gain confidence from the Maha Energy insiders selling. 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. Every company has risks, and we've spotted 2 warning signs for Maha Energy you should know about.

But note: Maha 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, but not derivative transactions.

If you’re looking to trade Maha Energy, open an account with the lowest-cost* platform trusted by professionals, Interactive Brokers. Their clients from over 200 countries and territories trade stocks, options, futures, forex, bonds and funds worldwide from a single integrated account. Promoted

Discounted cash flow calculation for every stock

Simply Wall St does a detailed discounted cash flow calculation every 6 hours for every stock on the market, so if you want to find the intrinsic value of any company just search here. It’s FREE.

Make Confident Investment Decisions

Simply Wall St's Editorial Team provides unbiased, factual reporting on global stocks using in-depth fundamental analysis.
Find out more about our editorial guidelines and team.