Over the past year, insiders sold US$3.3m worth of Mercury Systems, Inc. (NASDAQ:MRCY) stock at an average price of US$51.15 per share allowing them to get the most out of their money. The company's market cap plunged by US$159m after price dropped by 5.7% last week but insiders were able to limit their loss to an extent.

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.

See our latest analysis for Mercury Systems

The Last 12 Months Of Insider Transactions At Mercury Systems

The President, Mark Aslett, made the biggest insider sale in the last 12 months. That single transaction was for US$1.1m worth of shares at a price of US$51.52 each. While we don't usually like to see insider selling, it's more concerning if the sales take place at a lower price. The silver lining is that this sell-down took place above the latest price (US$45.70). So it may not shed much light on insider confidence at current levels.

In the last twelve months insiders purchased 25.27k shares for US$1.2m. On the other hand they divested 64.00k shares, for US$3.3m. All up, insiders sold more shares in Mercury Systems than they bought, over the last year. The chart below shows insider transactions (by companies and individuals) over the last year. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

If you like to buy stocks that insiders are buying, rather than selling, then you might just love this free list of companies. (Hint: insiders have been buying them).

Insiders At Mercury Systems Have Sold Stock Recently

There was substantially more insider selling, than buying, of Mercury Systems shares over the last three months. We note insiders cashed in US$3.2m worth of shares. Meanwhile Independent Director Howard Lance bought US$253k worth. Since the selling really does outweigh the buying, we'd say that these transactions may suggest that some insiders feel the company has been fully valued in recent months.

Insider Ownership Of Mercury Systems

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. It appears that Mercury Systems insiders own 2.1% of the company, worth about US$57m. 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 Mercury Systems Insiders?

The insider sales have outweighed the insider buying, at Mercury Systems, in the last three months. Zooming out, the longer term picture doesn't give us much comfort. Insiders own shares, but we're still pretty cautious, given the history of sales. We'd practice some caution before buying! 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. While conducting our analysis, we found that Mercury Systems has 3 warning signs and it would be unwise to ignore them.

But note: Mercury Systems 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.