It is not uncommon to see companies perform well in the years after insiders buy shares. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So we’ll take a look at whether insiders have been buying or selling shares in Independent Bank Corp. (NASDAQ:INDB).
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 in the company. However, such insiders must disclose their trading activities, and not trade on inside information.
We don’t think shareholders should simply follow insider transactions. But it is perfectly logical to keep tabs on what insiders are doing. For example, a Harvard University study found that ‘insider purchases earn abnormal returns of more than 6% per year.’
View our latest analysis for Independent Bank
Independent Bank Insider Transactions Over The Last Year
The Director, Kevin Jones, made the biggest insider sale in the last 12 months. That single transaction was for US$318k worth of shares at a price of US$80.55 each. While we don’t usually like to see insider selling, it’s more concerning if the sales take place at a lower price. It’s of some comfort that this sale was conducted at a price well above the current share price, which is US$66.52. So it may not tell us anything about how insiders feel about the current share price.
Over the last year, we note insiders sold 18150.51 shares worth US$1.4m. Insiders in Independent Bank didn’t buy any shares in the last year. 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!
Independent Bank Insiders Are Selling The Stock
The last quarter saw substantial insider selling of Independent Bank shares. In total, Director Daniel O’Brien sold US$130k worth of shares in that time, and we didn’t record any purchases whatsoever. This may suggest that some insiders think that the shares are not cheap.
Insider Ownership of Independent Bank
For a common shareholder, it is worth checking how many shares are held by company insiders. We usually like to see fairly high levels of insider ownership. Independent Bank insiders own about US$43m worth of shares. That equates to 1.9% of the company. 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 Independent Bank Insiders?
An insider sold Independent Bank shares recently, but they didn’t buy any. And even if we look to the last year, we didn’t see any purchases. On the plus side, Independent Bank makes money, and is growing profits. While insiders do own shares, they don’t own a heap, and they have been selling. We’re in no rush to buy! If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its future.
But note: Independent Bank 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.
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 editorial-team@simplywallst.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.