MGP Ingredients Insiders Sell US$19m Of Stock, Possibly Signalling Caution

In the last year, many MGP Ingredients, Inc. (NASDAQ:MGPI) insiders sold a substantial stake in the company which may have sparked shareholders' attention. When analyzing insider transactions, it is usually more valuable to know whether insiders are buying versus knowing if they are selling, as the latter sends an ambiguous message. However, when multiple insiders sell stock over a specific duration, shareholders should take notice as that could possibly be a red flag.

While insider transactions are not the most important thing when it comes to long-term investing, we would consider it foolish to ignore insider transactions altogether.

Check out our latest analysis for MGP Ingredients

The Last 12 Months Of Insider Transactions At MGP Ingredients

The insider, Paul Lux, made the biggest insider sale in the last 12 months. That single transaction was for US$2.4m worth of shares at a price of US$120 each. While we don't usually like to see insider selling, it's more concerning if the sales take place at a lower price. It's of some comfort that this sale was conducted at a price well above the current share price, which is US$90.05. So it may not shed much light on insider confidence at current levels.

Happily, we note that in the last year insiders paid US$110k for 1.25k shares. On the other hand they divested 165.01k shares, for US$19m. All up, insiders sold more shares in MGP Ingredients than they bought, over the last year. 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!

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).

MGP Ingredients Insiders Bought Stock Recently

It's good to see that MGP Ingredients insiders have made notable investments in the company's shares. Not only was there no selling that we can see, but they collectively bought US$110k worth of shares. That shows some optimism about the company's future.

Does MGP Ingredients Boast High Insider Ownership?

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. A high insider ownership often makes company leadership more mindful of shareholder interests. MGP Ingredients insiders own 23% of the company, currently worth about US$435m based on the recent share price. This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.

So What Do The MGP Ingredients Insider Transactions Indicate?

The recent insider purchases are heartening. But we can't say the same for the transactions over the last 12 months. Overall, we'd prefer see a more sustained buying from directors, but with a significant insider holding and more recent purchases, MGP Ingredients insiders are reasonably well aligned, and optimistic for the future. If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its future.

Of course MGP Ingredients 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 of direct interests only, but not derivative transactions or indirect interests.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.