The recent 5.5% drop in Melrose Industries PLC's (LON:MRO) stock could come as a blow to insiders who purchased UK£134k worth of stock at an average buy price of UK£1.65 over the past 12 months. This is not good as insiders invest based on expectations that their money will appreciate over time. However, as a result of recent losses, their original investment is now worth only UK£131k.

While insider transactions are not the most important thing when it comes to long-term investing, we do think it is perfectly logical to keep tabs on what insiders are doing.

View our latest analysis for Melrose Industries

The Last 12 Months Of Insider Transactions At Melrose Industries

Over the last year, we can see that the biggest insider purchase was by COO & Executive Director Peter Dilnot for UK£50k worth of shares, at about UK£1.56 per share. That implies that an insider found the current price of UK£1.61 per share to be enticing. Of course they may have changed their mind. But this suggests they are optimistic. If someone buys shares at well below current prices, it's a good sign on balance, but keep in mind they may no longer see value. Happily, the Melrose Industries insiders decided to buy shares at close to current prices.

While Melrose Industries insiders bought shares during the last year, they didn't sell. The chart below shows insider transactions (by companies and individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!

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 free list of companies. (Hint: insiders have been buying them).

Melrose Industries Insiders Bought Stock Recently

It's good to see that Melrose Industries insiders have made notable investments in the company's shares. Overall, two insiders shelled out UK£61k for shares in the company -- and none sold. That shows some optimism about the company's future.

Does Melrose Industries Boast High Insider Ownership?

I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with insiders. We usually like to see fairly high levels of insider ownership. Melrose Industries insiders own about UK£58m worth of shares. That equates to 0.8% of the company. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.

So What Do The Melrose Industries Insider Transactions Indicate?

It is good to see recent purchasing. We also take confidence from the longer term picture of insider transactions. However, we note that the company didn't make a profit over the last twelve months, which makes us cautious. Given that insiders also own a fair bit of Melrose Industries we think they are probably pretty confident of a bright future. Therefore, you should definitely take a look at this FREE report showing analyst forecasts for Melrose Industries.

But note: Melrose Industries 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.

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.