Yahoo Finance As MP Materials Corp. (NYSE:MP) drops to US$5.1b market cap, insiders might rethink their US$6.4m stock purchase earlier this year
The recent price decline of 7.9% in MP Materials Corp.'s (NYSE:MP) stock may have disappointed insiders who bought US$6.4m worth of shares at an average price of US$38.49 in the past 12 months. Insiders purchase with the hope of seeing their investments increase in value over time. However, due to recent losses, their initial investment is now only worth US$4.8m, which is not great.
While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, logic dictates you should pay some attention to whether insiders are buying or selling shares.
View our latest analysis for MP Materials
The Last 12 Months Of Insider Transactions At MP Materials
In the last twelve months, the biggest single purchase by an insider was when Lead Independent Director Randall Weisenburger bought US$3.5m worth of shares at a price of US$40.95 per share. That means that even when the share price was higher than US$28.89 (the recent price), an insider wanted to purchase shares. While their view may have changed since the purchase was made, this does at least suggest they have had confidence in the company's future. In our view, the price an insider pays for shares is very important. It is generally more encouraging if they paid above the current price, as it suggests they saw value, even at higher levels.
Over the last year, we can see that insiders have bought 166.10k shares worth US$6.4m. On the other hand they divested 5.40k shares, for US$216k. In total, MP Materials insiders bought more than they sold over the last year. 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!
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.
Does MP Materials 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. MP Materials insiders own 10% of the company, currently worth about US$521m based on the recent share price. Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.
So What Do The MP Materials Insider Transactions Indicate?
There haven't been any insider transactions in the last three months -- that doesn't mean much. On a brighter note, the transactions over the last year are encouraging. With high insider ownership and encouraging transactions, it seems like MP Materials insiders think the business has merit. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing MP Materials. You'd be interested to know, that we found 1 warning sign for MP Materials and we suggest you have a look.
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.
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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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