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 before you buy or sell Monmouth Real Estate Investment Corporation (NYSE:MNR), you may well want to know whether insiders have been buying or selling.
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, such insiders must disclose their trading activities, and not trade on inside information.
We don’t think shareholders should simply follow insider transactions. But logic dictates you should pay some attention to whether insiders are buying or selling shares. 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 Monmouth Real Estate Investment
Over the last year, we can see that the biggest insider sale was by Founder & Chairman Eugene Landy for US$111k worth of shares, at about US$13.84 per share. So we know that an insider sold shares at around the present share price of US$12.92. They could have a variety of motivations for selling, but it’s still not particularly encouraging to see. Arguably, insider selling at around current prices should give us reason to reflect on whether the stock is fully valued at the moment. The only individual insider seller over the last year was Eugene Landy.
Happily, we note that in the last year insiders paid US$267k for 18.09k shares. But they sold 8.00k for US$111k. Overall, Monmouth Real Estate Investment insiders were net buyers last year. They paid about US$14.77 on average. I’d consider this a positive as it suggests insiders see value at around the current price, which is US$12.92. You can see a visual depiction of insider transactions over the last 12 months, below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.
Insiders at Monmouth Real Estate Investment Have Sold Stock Recently
We have seen a bit of insider selling at Monmouth Real Estate Investment, over the last three months. US$111k worth of shares were sold by Eugene Landy. But US$73k was spent on buying, too, . While it’s not great to see insider selling, the net amount sold isn’t enough for us to want to read anything into it.
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. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Monmouth Real Estate Investment insiders own 3.5% of the company, currently worth about US$42m based on the recent share price. I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.
So What Does This Data Suggest About Monmouth Real Estate Investment Insiders?
Our data shows a little more insider selling than buying in the last three months. But the difference isn’t enough to have us worried. On a brighter note, the transactions over the last year are encouraging. Insiders do have a stake in Monmouth Real Estate Investment and their transactions don’t cause us concern. 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.
But note: Monmouth Real Estate Investment may not be the best stock to buy. So take a peek at this free list of interesting companies with high ROE and low debt.
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.