Usually, when one insider buys stock, it might not be a monumental event. But when multiple insiders are buying like they did in the case of Middlesex Water Company (NASDAQ:MSEX), that sends out a positive message to the company's shareholders.

Although we don't think shareholders should simply follow insider transactions, logic dictates you should pay some attention to whether insiders are buying or selling shares.

The Last 12 Months Of Insider Transactions At Middlesex Water

Over the last year, we can see that the biggest insider purchase was by insider A. O'Connor for US$226k worth of shares, at about US$51.64 per share. Although we like to see insider buying, we note that this large purchase was at significantly below the recent price of US$62.34. While it does suggest insiders consider the stock undervalued at lower prices, this transaction doesn't tell us much about what they think of current prices.

Happily, we note that in the last year insiders paid US$309k for 5.99k shares. On the other hand they divested 3.01k shares, for US$192k. In the last twelve months there was more buying than selling by Middlesex Water insiders. The chart below shows insider transactions (by companies and individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

Middlesex Water is not the only stock that insiders are buying. For those who like to find small cap companies at attractive valuations, this free list of growing companies with recent insider purchasing, could be just the ticket.

Middlesex Water Insiders Are Selling The Stock

The last three months saw some Middlesex Water insider selling. Independent Lead Director Walter Reinhard divested only US$31k worth of shares in that time. It's not great to see insider selling, nor the lack of recent buyers. But the selling simply isn't sufficiently substantial to be of much use as a signal.

Does Middlesex Water 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. I reckon it's a good sign if insiders own a significant number of shares in the company. It appears that Middlesex Water insiders own 1.8% of the company, worth about US$21m. While this is a strong but not outstanding level of insider ownership, it's enough to indicate some alignment between management and smaller shareholders.

What Might The Insider Transactions At Middlesex Water Tell Us?

While there has not been any insider buying in the last three months, there has been selling. But the sales were small, so we're not concerned. On a brighter note, the transactions over the last year are encouraging. Insiders own shares in Middlesex Water and we see no evidence to suggest they are worried about the future. 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 2 warning signs for Middlesex Water you should be aware of, and 1 of these can't be ignored.

But note: Middlesex Water 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 of direct interests only, but not derivative transactions or indirect interests.

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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.