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 we'll take a look at whether insiders have been buying or selling shares in Matrix Service Company (NASDAQ:MTRX).
What Is Insider Buying?
It's quite normal to see company insiders, such as board members, trading in company stock, from time to time. However, such insiders must disclose their trading activities, and not trade on inside information.
We don't think shareholders should simply follow insider transactions. But it is perfectly logical to keep tabs on what insiders are doing. For example, a Harvard University study found that 'insider purchases earn abnormal returns of more than 6% per year'.
Matrix Service Insider Transactions Over The Last Year
The Chief Administrative Officer & VP, Nancy Austin-Downs, made the biggest insider sale in the last 12 months. That single transaction was for US$73k worth of shares at a price of US$20.66 each. While we don't usually like to see insider selling, it's more concerning if the sales take place at a lower price. The silver lining is that this sell-down took place above the latest price (US$10.20). So it may not tell us anything about how insiders feel about the current share price. Nancy Austin-Downs was the only individual insider to sell over the last year.
You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
I will like Matrix Service better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
Matrix Service Insiders Bought Stock Recently
There was some insider buying at Matrix Service over the last quarter. Independent Director James Miller purchased US$27k worth of shares in that period. We like it when there are only buyers, and no sellers. However, in this case the amount invested recently is quite small.
Insider Ownership of Matrix Service
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. Our data indicates that Matrix Service insiders own about US$7.5m worth of shares (which is 2.8% of the company). Whilst better than nothing, we're not overly impressed by these holdings.
So What Do The Matrix Service Insider Transactions Indicate?
Our data shows a little insider buying, but no selling, in the last three months. The net investment is not enough to encourage us much. The insider transactions at Matrix Service are not inspiring us to buy. We also note that, as far as we can see, insider ownership is fairly low, compared to other companies. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. To assist with this, we've discovered 1 warning sign that you should run your eye over to get a better picture of Matrix Service.
But note: Matrix Service 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.
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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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