We’ve lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. On the other hand, we’d be remiss not to mention that insider sales have been known to precede tough periods for a business. So shareholders might well want to know whether insiders have been buying or selling shares in Arrow Financial Corporation (NASDAQ:AROW).
What Is Insider Selling?
It is perfectly legal for company insiders, including board members, to buy and sell stock in a 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 equally, we would consider it foolish to ignore insider transactions altogether. 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.
The Last 12 Months Of Insider Transactions At Arrow Financial
In the last twelve months, the biggest single sale by an insider was when the Independent Director, Gary Dake, sold US$113k worth of shares at a price of US$31.44 per share. That means that even when the share price was below the current price of US$35.26, 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 7.9% of Gary Dake’s holding.
Insiders in Arrow Financial didn’t buy any shares in the last year. You can see the insider transactions (by 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!
If you like to buy stocks that insiders are buying, rather than selling, then you might just love this free list of companies. (Hint: insiders have been buying them).
Insiders at Arrow Financial Have Sold Stock Recently
The last three months saw some Arrow Financial insider selling. Insiders sold just US$45k worth of shares in that time. Neither the lack of buying nor the presence of selling is heartening. But the selling simply isn’t sufficiently substantial to be of much use as a signal.
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. I reckon it’s a good sign if insiders own a significant number of shares in the company. Arrow Financial insiders own about US$17m worth of shares. That equates to 3.3% of the company. 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 Do The Arrow Financial Insider Transactions Indicate?
While there has not been any insider buying in the last three months, there has been selling. But the sales were small, so we’re not concerned. Recent sales exacerbate our caution arising from analysis of Arrow Financial insider transactions. The modest level of insider ownership is, at least, some comfort. Of course, the future is what matters most. So if you are interested in Arrow Financial, you should check out this free report on analyst forecasts for the company.
Of course Arrow Financial 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.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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.
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