It is not uncommon to see companies perform well in the years after insiders buy shares. 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 The Macerich Company (NYSE:MAC), 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, rules govern insider transactions, and certain disclosures are required.
We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. But it is perfectly logical to keep tabs on what insiders are doing. 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'.
Macerich Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider sale was by the insider, Sharon Berger, for US$44m worth of shares, at about US$22.02 per share. We generally don't like to see insider selling, but the lower the sale price, the more it concerns us. The good news is that this large sale was at well above current price of US$12.97. So it may not tell us anything about how insiders feel about the current share price. Notably Sharon Berger was also the biggest buyer, having purchased US$39m worth of shares.
In the last twelve months insiders purchased 4.20m shares for US$39m. But they sold 2.02m shares for US$44m. In total, Macerich insiders sold more than they bought over the last year. They sold for an average price of about US$21.90. It is certainly not great to see that insiders have sold shares in the company. However, we do note that the average sale price was significantly higher than the current share price (which is US$12.97). You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
I will like Macerich better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
Macerich Insiders Are Selling The Stock
There was substantially more insider selling, than buying, of Macerich shares over the last three months. In that time, insiders dumped US$44m worth of shares. On the other hand we note insider Sharon Berger bought US$14m worth of shares. Generally this level of net selling might be considered a bit bearish.
Insider Ownership of Macerich
For a common shareholder, it is worth checking how many shares are held by company insiders. I reckon it's a good sign if insiders own a significant number of shares in the company. Macerich insiders own about US$120m worth of shares (which is 5.8% 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.
What Might The Insider Transactions At Macerich Tell Us?
The insider sales have outweighed the insider buying, at Macerich, in the last three months. Despite some insider buying, the longer term picture doesn't make us feel much more positive. While insiders do own a lot of shares in the company (which is good), our analysis of their transactions doesn't make us feel confident about the company. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. To help with this, we've discovered 5 warning signs (1 is a bit unpleasant!) that you ought to be aware of before buying any shares in Macerich.
Of course Macerich 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, but not derivative transactions.
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