Have Insiders Been Selling Mexco Energy Corporation (NYSEMKT:MXC) Shares?

We've lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. On the other hand, we'd be remiss not to mention that insider sales have been known to precede tough periods for a business. So before you buy or sell Mexco Energy Corporation (NYSEMKT:MXC), you may well want to know whether insiders have been buying or selling.

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, most countries require that the company discloses such transactions to the market.

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. For example, a Columbia University study found that 'insiders are more likely to engage in open market purchases of their own company’s stock when the firm is about to reveal new agreements with customers and suppliers'.

Check out our latest analysis for Mexco Energy

Mexco Energy Insider Transactions Over The Last Year

Over the last year, we can see that the biggest insider sale was by the Independent Director, Thomas Decker, for US$78k worth of shares, at about US$7.84 per share. So it's clear an insider wanted to take some cash off the table, even slightly below the current price of US$7.91. We generally consider it a negative if insiders have been selling, especially if they did so below the current price, because it implies that they considered a lower price to be reasonable. However, while insider selling is sometimes discouraging, it's only a weak signal. This single sale was just 20% of Thomas Decker's stake. Notably Thomas Decker was also the biggest buyer, having purchased US$65k worth of shares.

Happily, we note that in the last year insiders paid US$65k for 22.82k shares. On the other hand they divested 21.01k shares, for US$153k. Over the last year we saw more insider selling of Mexco Energy shares, than buying. They sold for an average price of about US$7.28. We don't gain confidence from insider selling below the recent share price. But we wouldn't put too much weight on the insider selling. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

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Mexco Energy Insiders Are Selling The Stock

We have seen a bit of insider selling at Mexco Energy, over the last three months. Independent Director Michael Banschbach only netted US$37k selling shares, in that period. It's not great to see insider selling, nor the lack of recent buyers. But the amount sold isn't enough for us to put any weight on it.

Insider Ownership of Mexco Energy

I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with insiders. I reckon it's a good sign if insiders own a significant number of shares in the company. It's great to see that Mexco Energy insiders own 60% of the company, worth about US$9.7m. Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.

So What Does This Data Suggest About Mexco Energy Insiders?

While there has not been any insider buying in the last three months, there has been selling. However, the sales are not big enough to concern us at all. It's great to see high levels of insider ownership, but looking back over the last year, we don't gain confidence from the Mexco Energy insiders selling. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. When we did our research, we found 4 warning signs for Mexco Energy (1 is a bit unpleasant!) that we believe deserve your full attention.

If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, that have HIGH return on equity 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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