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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.