Insider Buyers At MultiPlan Likely Disappointed With 23% Slide

Insiders who acquired US$731.1k worth of MultiPlan Corporation's (NYSE:MPLN) stock at an average price of US$14.00 in the past 12 months may be dismayed by the recent 23% price decline. Insiders buy with the expectation to see their investments rise in value over a period of time. However, recent losses have rendered their above investment worth US$376.9k which is not ideal.

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 MultiPlan

The Last 12 Months Of Insider Transactions At MultiPlan

The Executive VP & CFO Doug Garis made the biggest insider purchase in the last 12 months. That single transaction was for US$346k worth of shares at a price of US$12.39 each. That means that an insider was happy to buy shares at above the current price of US$7.22. While their view may have changed since the purchase was made, this does at least suggest they have had confidence in the company's future. We always take careful note of the price insiders pay when purchasing shares. As a general rule, we feel more positive about a stock if insiders have bought shares at above current prices, because that suggests they viewed the stock as good value, even at a higher price.

MultiPlan insiders may have bought shares in the last year, but they didn't sell any. The average buy price was around US$14.00. This is nice to see since it implies that insiders might see value around current prices. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

MultiPlan is not the only stock insiders are buying. So take a peek at this free list of under-the-radar companies with insider buying.

Insiders At MultiPlan Have Bought Stock Recently

Over the last three months, we've seen significant insider buying at MultiPlan. In total, insiders bought US$635k worth of shares in that time, and we didn't record any sales whatsoever. This could be interpreted as suggesting a positive outlook.

Does MultiPlan 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. Our data indicates that MultiPlan insiders own about US$6.8m worth of shares (which is 5.7% of the company). Overall, this level of ownership isn't that impressive, but it's certainly better than nothing!

So What Do The MultiPlan Insider Transactions Indicate?

It is good to see recent purchasing. We also take confidence from the longer term picture of insider transactions. However, we note that the company didn't make a profit over the last twelve months, which makes us cautious. While the overall levels of insider ownership are below what we'd like to see, the history of transactions imply that MultiPlan insiders are reasonably well aligned, and optimistic for the future. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. At Simply Wall St, we've found that MultiPlan has 2 warning signs (1 is a bit unpleasant!) that deserve your attention before going any further with your analysis.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting 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.