Martin Midstream Partners L.P. collects, transports, stores, and markets petroleum products and by-products in the United States Gulf Coast region. Martin Midstream Partners’s insiders have invested 152.89k shares in the small-cap stocks within the past three months. It is widely considered that insider buying stock in their own companies is potentially a bullish signal. A research published in The MIT Press (1998) concluded that stocks following insider buying outperformed the market by 4.5%. However, these signals may not be enough to gain conviction on whether to invest. I will be analysing whether these buying activities are supported by favourable future outlook and recent share price volatility.
Check out our latest analysis for Martin Midstream Partners
Which Insiders Are Buying?
Over the past three months, more shares have been bought than sold by Martin Midstream Partners’s’ insiders. In total, individual insiders own less than one million shares in the business, or around 1.49% of total shares outstanding.
Insiders that have recently ramped up their holdings are:| Name | Management | Board | Total Annual Compensation |
|---|---|---|---|
| Chris Booth | ✔ | US$183.6k | |
| Randall Tauscher | ✔ | ✔ | US$230.0k |
| Robert Bondurant | ✔ | ✔ | US$412.5k |
| Ruben Martin | ✔ | US$276.0k |
Does Buying Activity Reflect Future Growth?
From the outside, Martin Midstream Partners’s future looks muffled. Digging deeper into the line items, Martin Midstream Partners is believed to experience a restrained level of top-line growth over the next year, but a suggestively greater level of expected earnings growth. Generally, this difference can be explained by a large drop in cost growth. Insider confidence in the company could be signalled by their net buying activity as they expect sustained growth moving forward. Or they may believe share price is below intrinsic value, offering an opportunity to buy.
Did Stock Price Volatility Instigate Buying?
An alternative reason for recent trades could be insiders taking advantage of the share price volatility. 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, Martin Midstream Partners’s share price reached a high of $15.3 and a low of $11.5. This suggests moderate volatility with a share price movement of 33.04%. Insiders may deem this relatively meaningful movement as an opportunity to increase their shareholdings.
Next Steps:
Martin Midstream Partners’s net buying tells us the stock is in favour with some insiders, which is consistent with the significant expected earnings growth, on top of a reasonable share price movement around the same time. However, while insider transactions could be a helpful signal, it is definitely not sufficient on its own to make an investment decision. there are two fundamental factors you should further research:
- Financial Health: Does Martin Midstream Partners 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.
- Other High Quality Alternatives : Are there other high quality stocks you could be holding instead of Martin Midstream Partners? 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.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.