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 before you buy or sell RBB Bancorp (NASDAQ:RBB), you may well want to know whether insiders have been buying or selling.
Do Insider Transactions Matter?
It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, rules govern insider transactions, and certain disclosures are required.
Insider transactions are not the most important thing when it comes to long-term investing. But it is perfectly logical to keep tabs on what insiders are doing. As Peter Lynch said, ‘insiders might sell their shares for any number of reasons, but they buy them for only one: they think the price will rise’.
View our latest analysis for RBB Bancorp
RBB Bancorp Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider purchase was by Secretary & Independent Director Peter M. Chang for US$2.3m worth of shares, at about US$20.00 per share. So it’s clear an insider wanted to buy, even at a higher price than the current share price (being US$13.04). It’s very possible they regret the purchase, but it’s more likely they are bullish about the company. We always take careful note of the price insiders pay when purchasing shares. Generally speaking, it catches our eye when insiders have purchased shares at above current prices, as it suggests they believed the shares were worth buying, even at a higher price.
Happily, we note that in the last year insiders paid US$4.8m for 285.09k shares. On the other hand they divested 23.80k shares, for US$462k. In the last twelve months there was more buying than selling by RBB Bancorp insiders. The average buy price was around US$17.01. I’d consider this a positive as it suggests insiders see value at around the current price. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of growing companies that insiders are buying.
RBB Bancorp Insiders Bought Stock Recently
We saw some RBB Bancorp insider buying shares in the last three months. Independent Director James W. Kao bought US$51k worth of shares in that time. On the other hand, Independent Director Chie-Min Koo sold US$30k worth of shares. It is nice to see that insiders have bought, but the quantum isn’t large enough to get us excited.
Insider Ownership
Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. I reckon it’s a good sign if insiders own a significant number of shares in the company. It appears that RBB Bancorp insiders own 37% of the company, worth about US$94m. While this is a strong but not outstanding level of insider ownership, it’s enough to indicate some alignment between management and smaller shareholders.
So What Does This Data Suggest About RBB Bancorp Insiders?
Our data shows a little insider buying, but no selling, in the last three months. The net investment is not enough to encourage us much. But insiders have shown more of an appetite for the stock, over the last year. Insiders own shares in RBB Bancorp and we see no evidence to suggest they are worried about the future. While we like knowing what’s going on with the insider’s ownership and transactions, we make sure to also consider what risks are facing a stock before making any investment decision. You’d be interested to know, that we found 1 warning sign for RBB Bancorp and we suggest you have a look.
Of course RBB Bancorp may not be the best stock to buy. So you may wish to see this free collection of high quality companies.
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. 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.
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