This Insider Has Just Sold Shares In MP Materials Corp. (NYSE:MP)

We wouldn't blame MP Materials Corp. (NYSE:MP) shareholders if they were a little worried about the fact that James Litinsky, the Chairman recently netted about US$43m selling shares at an average price of US$33.78. However, that sale only accounted for 7.0% of their holding, so arguably it doesn't say much about their conviction.

Check out our latest analysis for MP Materials

The Last 12 Months Of Insider Transactions At MP Materials

Notably, that recent sale by James Litinsky is the biggest insider sale of MP Materials shares that we've seen in the last year. That means that even when the share price was below the current price of US$35.15, an insider wanted to cash in some shares. When an insider sells below the current price, it suggests that they considered that lower price to be fair. That makes us wonder what they think of the (higher) recent valuation. While insider selling is not a positive sign, we can't be sure if it does mean insiders think the shares are fully valued, so it's only a weak sign. It is worth noting that this sale was only 7.0% of James Litinsky's holding.

The chart below shows insider transactions (by companies and individuals) 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 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).

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. A high insider ownership often makes company leadership more mindful of shareholder interests. MP Materials insiders own about US$694m worth of shares (which is 11% of the company). 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 MP Materials Insider Transactions Indicate?

An insider sold MP Materials shares recently, but they didn't buy any. Looking to the last twelve months, our data doesn't show any insider buying. It is good to see high insider ownership, but the insider selling leaves us cautious. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing MP Materials. Every company has risks, and we've spotted 2 warning signs for MP Materials you should know about.

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, but not derivative transactions.

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