We've lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. 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 shareholders might well want to know whether insiders have been buying or selling shares in Mercia Asset Management PLC (LON:MERC).

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, most countries require that the company discloses such transactions to the market.

Insider transactions are not the most important thing when it comes to long-term investing. But it is perfectly logical to keep tabs on what insiders are doing. For example, a Harvard University study found that 'insider purchases earn abnormal returns of more than 6% per year'.

Check out our latest analysis for Mercia Asset Management

Mercia Asset Management Insider Transactions Over The Last Year

In the last twelve months, the biggest single sale by an insider was when the Non-Executive Director & Co-Founder, Raymond Chamberlain, sold UK£249k worth of shares at a price of UK£0.30 per share. That means that even when the share price was below the current price of UK£0.33, an insider wanted to cash in some shares. We generally consider it a negative if insiders have been selling, especially if they did so below the current price, because it implies that they considered a lower price to be reasonable. However, while insider selling is sometimes discouraging, it's only a weak signal. It is worth noting that this sale was only 3.5% of Raymond Chamberlain's holding. The only individual insider seller over the last year was Raymond Chamberlain. Notably Raymond Chamberlain was also the biggest buyer, having purchased UK£379k worth of shares.

In the last twelve months insiders purchased 1.77m shares for UK£379k. On the other hand they divested 830.00k shares, for UK£249k. In the last twelve months there was more buying than selling by Mercia Asset Management insiders. 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!

 insider-trading-volume

There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this freelist of growing companies that insiders are buying.

Insiders at Mercia Asset Management Have Sold Stock Recently

There was substantially more insider selling, than buying, of Mercia Asset Management shares over the last three months. We note Non-Executive Director & Co-Founder Raymond Chamberlain cashed in UK£249k worth of shares. On the other hand we note insider Diane Seymour-Williams bought UK£74k worth of shares. Since the selling really does outweigh the buying, we'd say that these transactions may suggest that some insiders feel the shares are not cheap.

Does Mercia Asset Management Boast High Insider Ownership?

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 Mercia Asset Management insiders own 14% of the company, worth about UK£20m. We've certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.

So What Does This Data Suggest About Mercia Asset Management Insiders?

Unfortunately, there has been more insider selling of Mercia Asset Management stock, than buying, in the last three months. On the other hand, the insider transactions over the last year are encouraging. We like that insiders own a fair amount of the company. So we're not overly bothered by recent selling. So while it's helpful to know what insiders are doing in terms of buying or selling, it's also helpful to know the risks that a particular company is facing. For instance, we've identified 3 warning signs for Mercia Asset Management (1 is concerning) you should be aware of.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this freelist 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. 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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