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The recent 3.6% drop in Membership Collective Group Inc.'s (NYSE:MCG) stock could come as a blow to insiders who purchased US$4.4m worth of stock at an average buy price of US$12.87 over the past 12 months. Insiders buy with the expectation to see their investments rise in value over a period of time. However, recent losses have rendered their above investment worth US$4.1m which is not ideal.
While insider transactions are not the most important thing when it comes to long-term investing, we do think it is perfectly logical to keep tabs on what insiders are doing.
Membership Collective Group Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider purchase was by Executive Chairman Ronald Burkle for US$2.4m worth of shares, at about US$12.33 per share. So it's clear an insider wanted to buy, even at a higher price than the current share price (being US$11.91). Their view may have changed since then, but at least it shows they felt optimistic at the time. To us, it's very important to consider the price insiders pay for shares. Generally speaking, it catches our eye when insiders have purchased shares at above current prices, as it suggests they believed the shares were worth buying, even at a higher price.
In the last twelve months Membership Collective Group insiders were buying shares, but not selling. The chart below shows insider transactions (by companies and individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!
Membership Collective Group is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Insiders at Membership Collective Group Have Bought Stock Recently
Over the last quarter, Membership Collective Group insiders have spent a meaningful amount on shares. Overall, four insiders shelled out US$4.4m for shares in the company -- and none sold. That shows some optimism about the company's future.
Insider Ownership of Membership Collective Group
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. We usually like to see fairly high levels of insider ownership. It's great to see that Membership Collective Group insiders own 33% of the company, worth about US$789m. 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 Membership Collective Group Insiders?
The recent insider purchases are heartening. And the longer term insider transactions also give us confidence. However, we note that the company didn't make a profit over the last twelve months, which makes us cautious. When combined with notable insider ownership, these factors suggest Membership Collective Group insiders are well aligned, and quite possibly think the share price is too low. One for the watchlist, at least! So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. Our analysis shows 3 warning signs for Membership Collective Group (1 is concerning!) and we strongly recommend you look at these before investing.
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.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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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