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It is not uncommon to see companies perform well in the years after insiders buy shares. The flip side of that is that there are more than a few examples of insiders dumping stock prior to a period of weak performance. So shareholders might well want to know whether insiders have been buying or selling shares in Mistras Group, Inc. (NYSE:MG).
Do Insider Transactions Matter?
It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. 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 equally, we would consider it foolish to ignore insider transactions altogether. As Peter Lynch said, 'insiders might sell their shares for any number of reasons, but they buy them for only one: they think the price will rise'.
Mistras Group Insider Transactions Over The Last Year
In the last twelve months, the biggest single purchase by an insider was when Founder & Executive Chairman Sotirios Vahaviolos bought US$396k worth of shares at a price of US$4.52 per share. We do like to see buying, but this purchase was made at well below the current price of US$7.75. While it does suggest insiders consider the stock undervalued at lower prices, this transaction doesn't tell us much about what they think of current prices.
In the last twelve months insiders purchased 263.38k shares for US$1.3m. But they sold 47.72k shares for US$217k. Overall, Mistras Group insiders were net buyers during the last year. 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!
There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of growing companies that insiders are buying.
Mistras Group Insiders Are Selling The Stock
We've seen more insider selling than insider buying at Mistras Group recently. We note Independent Lead Director Manuel Stamatakis cashed in US$217k worth of shares. On the other hand we note Independent Lead Director Manuel Stamatakis bought US$147k worth of shares. The share price has moved a bit recently, but it's hard to argue that the selling is a positive.
For a common shareholder, it is worth checking how many shares are held by company 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. Insiders own 39% of Mistras Group shares, worth about US$89m. While this is a strong but not outstanding level of insider ownership, it's enough to indicate some alignment between management and smaller shareholders.
What Might The Insider Transactions At Mistras Group Tell Us?
The stark truth for Mistras Group is that there has been more insider selling than insider buying in the last three months. On the other hand, the insider transactions over the last year are encouraging. It's good to see insiders are shareholders. So the recent selling doesn't worry us too much. While we like knowing what's going on with the insider's ownership and transactions, we make sure to also consider what risks are facing a stock before making any investment decision. For instance, we've identified 3 warning signs for Mistras Group (1 is concerning) you should be aware of.
If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, that have HIGH return on equity and low debt.
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.
This article by Simply Wall St is general in nature. 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.
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