It is not uncommon to see companies perform well in the years after insiders buy shares. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So shareholders might well want to know whether insiders have been buying or selling shares in Martin Marietta Materials, Inc. (NYSE:MLM).
Do Insider Transactions Matter?
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 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.’
The Last 12 Months Of Insider Transactions At Martin Marietta Materials
Senior Vice President of Human Resources Donald McCunniff made the biggest insider sale in the last 12 months. That single transaction was for US$975k worth of shares at a price of US$231 each. So we know that an insider sold shares at around the present share price of US$175. They could have a variety of motivations for selling, but it’s still not particularly encouraging to see. We generally tread carefully if insiders have been selling on market, even if they sold slightly above the current price. Donald McCunniff was the only individual insider to sell over the last year.
Happily, we note that in the last year insiders paid US$1.2m for 5.90k shares. On the other hand they divested 6.48k shares, for US$1.4m. Donald McCunniff divested 6.48k shares over the last 12 months at an average price of US$222. The chart below shows insider transactions over the last year. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.
Does Martin Marietta Materials Boast High Insider Ownership?
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. It’s great to see that Martin Marietta Materials insiders own 0.6% of the company, worth about US$67m. 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 Do The Martin Marietta Materials Insider Transactions Indicate?
It doesn’t really mean much that no insider has traded Martin Marietta Materials shares in the last quarter. We don’t take much encouragement from the transactions by Martin Marietta Materials insiders. But we do like the fact that insiders own a fair chunk of the company. 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 Martin Marietta Materials may not be the best stock to buy. So you may wish to see this free collection of high quality companies.
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 firstname.lastname@example.org.