It can be useful for investors to keep an eye on which shares have experienced meaningful insider buying.
This is because insider buying is often regarded as a bullish indicator.
As few people know a company and its intrinsic value better than its own directors, if they are buying, it suggests that they are confident in the direction the company is heading. They may even believe that their shares are undervalued at current levels.
With that in mind, let's take a look at one popular ASX 200 share that has just reported significant insider buying.
The share is question is fund manager Magellan Financial Group Ltd (ASX: MFG).
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Insider loads up on Magellan shares
With the company's shares down 22% since mid to late March, it seems that one of its directors feels that this has created a buying opportunity.
According to a change of director's interest notice, the company's non-executive director, Cathy Kovacs, has snapped up her first Magellan shares since joining the fund manager in November of last year.
The release reveals that Ms. Kovacs bought 12,400 shares through an on-market trade on 30 May. She paid an average of $8.02 per share, which equates to a total consideration of just a touch under $100,000.
Should you invest?
The broker community remains divided on Magellan's shares. Though, it is worth noting that analysts appear to be seeing value emerge following recent weakness.
For example, last month analysts at Macquarie put an underperform rating on its shares. Though, its price target of $8.40 is now higher than where its shares currently trade.
Elsewhere, analysts at Morgans only have a hold rating on its shares. But with a price target of $9.67, this implies potential upside of 20% for investors over the next 12 months. In addition, Morgans is forecasting dividends per share of 63 cents in FY 2024 and then 64 cents in FY 2025. This equates to sizeable dividend yields of 7.8% and 8%, respectively.
Finally, analysts at UBS are likely to be supportive of Kovacs' decision to buy her first Magellan shares. The broker currently has a buy rating and lofty $10.25 price target on the fund manager's shares. This suggests that they could rise by over 27% from current levels.
If that were to happen, it would value the non-executive director's holding at $127,100. That certainly would be a great return on investment.
Though, as always, time will tell which brokers make the right call.
