It is usually uneventful when a single insider buys stock. However, When quite a few insiders buy shares, as it happened in Mercia Asset Management PLC's (LON:MERC) case, it's fantastic news for shareholders.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we would consider it foolish to ignore insider transactions altogether.

View our latest analysis for Mercia Asset Management

Mercia Asset Management Insider Transactions Over The Last Year

In the last twelve months, the biggest single purchase by an insider was when Chief Operating Officer Peter Dines bought UK£199k worth of shares at a price of UK£0.30 per share. So it's clear an insider wanted to buy, even at a higher price than the current share price (being UK£0.29). It's very possible they regret the purchase, but it's more likely they are bullish about the company. We always take careful note of the price insiders pay when purchasing shares. It is generally more encouraging if they paid above the current price, as it suggests they saw value, even at higher levels.

In the last twelve months Mercia Asset Management insiders were buying shares, but not selling. You can see a visual depiction of insider transactions (by companies and individuals) 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! insider-trading-volume

There are always plenty of stocks that insiders are buying. So if that suits your style you could check each stock one by one or you could take a look at this freelist of companies. (Hint: insiders have been buying them).

Insiders At Mercia Asset Management Have Bought Stock Recently

Over the last quarter, Mercia Asset Management insiders have spent a meaningful amount on shares. In total, insiders bought UK£348k worth of shares in that time, and we didn't record any sales whatsoever. That shows some optimism about the company's future.



Insider Ownership Of Mercia Asset Management

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. Insiders own 9.1% of Mercia Asset Management shares, worth about UK£12m. 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 Mercia Asset Management Tell Us?

The recent insider purchases are heartening. And the longer term insider transactions also give us confidence. When combined with notable insider ownership, these factors suggest Mercia Asset Management insiders are well aligned, and that they may think the share price is too low. 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. Case in point: We've spotted 3 warning signs for Mercia Asset Management you should be aware of, and 1 of them doesn't sit too well with us.

But note: Mercia Asset Management may not be the best stock to buy. So take a peek at this freelist of interesting companies with high ROE 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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