We’ve lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. 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 shareholders might well want to know whether insiders have been buying or selling shares in Capital Bancorp, Inc. (NASDAQ:CBNK).
What Is Insider Selling?
It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, most countries require that the company discloses such transactions to the market.
Insider transactions are not the most important thing when it comes to long-term investing. 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.
Capital Bancorp Insider Transactions Over The Last Year
In the last twelve months, the biggest single sale by an insider was when the insider, Nick Bryan, sold US$177k worth of shares at a price of US$13.81 per share. That means that even when the share price was below the current price of US$14.43, an insider wanted to cash in some shares. As a general rule we consider it to be discouraging when insiders are selling below the current price, because it suggests they were happy with a lower valuation. While insider selling is not a positive sign, we can’t be sure if it does mean insiders think the shares are fully valued, so it’s only a weak sign. It is worth noting that this sale was only 35% of Nick Bryan’s holding.
Over the last year, we can see that insiders have bought 600 shares worth US$7.2k. But insiders sold 21317 shares worth US$282k. In total, Capital Bancorp insiders sold more than they bought over the last year. The chart below shows insider transactions (by individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!
If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.
Capital Bancorp Insiders Are Selling The Stock
The last quarter saw substantial insider selling of Capital Bancorp shares. In total, insiders sold US$235k worth of shares in that time, and we didn’t record any purchases whatsoever. Overall this makes us a bit cautious, but it’s not the be all and end all.
Insider Ownership of Capital Bancorp
For a common shareholder, it is worth checking how many shares are held by company insiders. I reckon it’s a good sign if insiders own a significant number of shares in the company. Capital Bancorp insiders own about US$78m worth of shares. That equates to 39% of the company. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.
What Might The Insider Transactions At Capital Bancorp Tell Us?
Insiders sold Capital Bancorp shares recently, but they didn’t buy any. Zooming out, the longer term picture doesn’t give us much comfort. On the plus side, Capital Bancorp makes money, and is growing profits. Insiders own shares, but we’re still pretty cautious, given the history of sales. So we’d only buy after careful consideration. Therefore, you should should definitely take a look at this FREE report showing analyst forecasts for Capital Bancorp.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting 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 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.
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