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We often see insiders buying up shares in companies that perform well over the long term. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So before you buy or sell DNB Financial Corporation (NASDAQ:DNBF), you may well want to know whether insiders have been buying or selling.
Do Insider Transactions Matter?
Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock on the market. However, rules govern insider transactions, and certain disclosures are required.
We don’t think shareholders should simply follow insider transactions. But equally, we would consider it foolish to ignore insider transactions altogether. For example, a Harvard University study found that ‘insider purchases earn abnormal returns of more than 6% per year.’
DNB Financial Insider Transactions Over The Last Year
In the last twelve months, the biggest single sale by an insider was when the Executive VP, Bruce Moroney, sold US$169k worth of shares at a price of US$35.93 per share. That means that even when the share price was below the current price of US$39.72, an insider wanted to cash in some shares. When an insider sells below the current price, it suggests that they considered that lower price to be fair. That makes us wonder what they think of the (higher) recent valuation. However, while insider selling is sometimes discouraging, it’s only a weak signal. It is worth noting that this sale was only 20.9% of Bruce Moroney’s holding.
Happily, we note that in the last year insiders paid US$181k for 5374 shares. But they sold 6212.37 for US$220k. Over the last year we saw more insider selling of DNB Financial shares, than buying. They sold for an average price of about US$35.48. It’s not particularly great to see insiders were selling shares at below recent prices. Since insiders sell for many reasons, we wouldn’t put too much weight on it. The chart below shows insider transactions (by 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!
For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.
Insiders at DNB Financial Have Bought Stock Recently
Over the last quarter, DNB Financial insiders have spent a meaningful amount on shares. In total, insiders bought US$50k worth of shares in that time, and we didn’t record any sales whatsoever. This makes one think the business has some good points.
For a common shareholder, it is worth checking how many shares are held by company insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. Insiders own 12% of DNB Financial shares, 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.
So What Does This Data Suggest About DNB Financial Insiders?
The recent insider purchases are heartening. However, the longer term transactions are not so encouraging. The more recent transactions are a positive, but DNB Financial insiders haven’t shown the sustained enthusiasm that we look for, although they do own a decent number of shares, overall. So they seem pretty well aligned, overall. Of course, the future is what matters most. So if you are interested in DNB Financial, you should check out this free report on analyst forecasts for the company.
If you would prefer to check out another company — one with potentially superior financials — then do not miss this free list of interesting companies, that have HIGH return on equity and low debt.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at email@example.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.