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Quite a few insiders invested in Melrose Industries PLC (LON:MRO) last year which is positive news for shareholders

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·3-min read
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Generally, when a single insider buys stock, it is usually not a big deal. However, when several insiders are buying, like in the case of Melrose Industries PLC (LON:MRO), it sends a favourable message to the company's shareholders.

Although we don't think shareholders should simply follow insider transactions, logic dictates you should pay some attention to whether insiders are buying or selling shares.

View our latest analysis for Melrose Industries

The Last 12 Months Of Insider Transactions At Melrose Industries

The Independent Non-Executive Chairman Justin Dowley made the biggest insider purchase in the last 12 months. That single transaction was for UK£99k worth of shares at a price of UK£1.32 each. Even though the purchase was made at a significantly lower price than the recent price (UK£1.50), we still think insider buying is a positive. Because it occurred at a lower valuation, it doesn't tell us much about whether insiders might find today's price attractive.

Melrose Industries insiders may have bought shares in the last year, but they didn't sell any. The chart below shows insider transactions (by companies and individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

insider-trading-volume
insider-trading-volume

Melrose Industries is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.

Insiders at Melrose Industries Have Bought Stock Recently

Over the last three months, we've seen a bit of insider buying at Melrose Industries. Independent Non-Executive Director Charlotte Twyning shelled out UK£20k for shares in that time. It's good to see the insider buying, as well as the lack of recent sellers. But the amount invested in the last three months isn't enough for us too put much weight on it, as a single factor.

Insider Ownership of Melrose Industries

Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. It appears that Melrose Industries insiders own 0.8% of the company, worth about UK£54m. We've certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.

What Might The Insider Transactions At Melrose Industries Tell Us?

Our data shows a little insider buying, but no selling, in the last three months. Overall the buying isn't worth writing home about. But insiders have shown more of an appetite for the stock, over the last year. Insiders do have a stake in Melrose Industries and their transactions don't cause us concern. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. For example - Melrose Industries has 1 warning sign we think 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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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