Even if it’s not a huge purchase, we think it was good to see that William Peeples, the Chairman of the Board of Community West Bancshares (NASDAQ:CWBC) recently shelled out US$51k to buy stock, at US$9.69 per share. That might not be a big purchase but it only increased their holding by 0.7%, and could be interpreted as a good sign.
The Last 12 Months Of Insider Transactions At Community West Bancshares
In fact, the recent sale by Chairman of the Board William Peeples was not their only sale of Community West Bancshares shares this year. They previously made an even bigger sale of -US$329.8k worth of shares at a price of US$12.30 per share. While insider selling is a negative, to us, it is more negative if the shares are sold at a lower price. The silver lining is that this sell-down took place above the latest price (US$9.68). So it may not tell us anything about how insiders feel about the current share price.
In the last twelve months insiders purchased 19276 shares for US$191k. On the other hand they divested 84835 shares, for US$952k. All up, insiders sold more shares in Community West Bancshares than they bought, over 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!
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. 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 Community West Bancshares insiders own 25% of the company, worth about US$20m. 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 Do The Community West Bancshares Insider Transactions Indicate?
It’s certainly positive to see the recent insider purchases. On the other hand the transaction history, over the last year, isn’t so positive. We don’t take much heart from transactions by Community West Bancshares insiders over the last year. But they own a reasonable amount of the company, and there was some buying recently. In short they are likely aligned with shareholders. To put this in context, take a look at how a company has performed in the past. You can access this detailed graph of past earnings, revenue and cash flow .
Of course Community West Bancshares 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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