We often see insiders buying up shares in companies that perform well over the long term. The flip side of that is that there are more than a few examples of insiders dumping stock prior to a period of weak performance. So we’ll take a look at whether insiders have been buying or selling shares in Manulife Financial Corporation (TSE:MFC).

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, such insiders must disclose their trading activities, and not trade on inside information.

We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. But logic dictates you should pay some attention to whether insiders are buying or selling shares. For example, a Harvard University study found that ‘insider purchases earn abnormal returns of more than 6% per year.’

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The Last 12 Months Of Insider Transactions At Manulife Financial

Director Claude Prieur made the biggest insider purchase in the last 12 months. That single transaction was for CA$942k worth of shares at a price of CA$20.93 each. So it’s clear an insider wanted to buy, even at a higher price. It’s very possible they regret the purchase, but it’s more likely they are bullish about the company. That purchase may suggest an expectation of positive returns over the long term.

Happily, we note that in the last year insiders bought 71.46k shares for a total of CA$1.5m. In the last twelve months there was more buying than selling by Manulife Financial insiders. They paid about CA$21.47 on average. These transactions suggest that insiders have considered the current price of CA$20.58 attractive. The chart below shows insider transactions (by individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!

If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).

Manulife Financial Insiders Bought Stock Recently

Over the last three months, we’ve seen significant insider buying at Manulife Financial. In total, insiders bought CA$1.4m worth of shares in that time, and we didn’t record any sales whatsoever. This is a positive in our book as it implies some confidence.

Insider Ownership of Manulife Financial

For a common shareholder, it is worth checking how many shares are held by company insiders. We usually like to see fairly high levels of insider ownership. It appears that Manulife Financial insiders own 0.05% of the company, worth about CA$18m. 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 Manulife Financial Insiders?

The recent insider purchases are heartening. And the longer term insider transactions also give us confidence. Given that insiders also own a fair bit of Manulife Financial we think they are probably pretty confident of a bright future. If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its future.

But note: Manulife Financial may not be the best stock to buy. So take a peek at this free list of interesting companies with high ROE and low debt.

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.