Stock Analysis

Don't Ignore The Fact That This Insider Just Sold Some Shares In Popular, Inc. (NASDAQ:BPOP)

  •  Updated
NasdaqGS:BPOP
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We'd be surprised if Popular, Inc. (NASDAQ:BPOP) shareholders haven't noticed that an insider, Juan Guerrero, recently sold US$435k worth of stock at US$62.16 per share. That sale was 13% of their holding, so it does make us raise an eyebrow.

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The Last 12 Months Of Insider Transactions At Popular

Notably, that recent sale by Juan Guerrero is the biggest insider sale of Popular shares that we've seen in the last year. So we know that an insider sold shares at around the present share price of US$61.86. While we don't usually like to see insider selling, it's more concerning if the sales take place at a lower price. We note that this sale took place at around the current price, so it isn't a major concern, though it's hardly a good sign.

The chart below shows insider transactions (by companies and individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!

insider-trading-volume
NasdaqGS:BPOP Insider Trading Volume February 6th 2021

For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

Insider Ownership

I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with insiders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Insiders own 1.6% of Popular shares, worth about US$82m. While this is a strong but not outstanding level of insider ownership, it's enough to indicate some alignment between management and smaller shareholders.

What Might The Insider Transactions At Popular Tell Us?

An insider hasn't bought Popular stock in the last three months, but there was some selling. Despite some insider buying, the longer term picture doesn't make us feel much more positive. While insiders do own shares, they don't own a heap, and they have been selling. We'd practice some caution before buying! While we like knowing what's going on with the insider's ownership and transactions, we make sure to also consider what risks are facing a stock before making any investment decision. For example - Popular has 2 warning signs we think you should be aware of.

But note: Popular 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.

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What are the risks and opportunities for Popular?

Popular, Inc., through its subsidiaries, provides various retail, mortgage, and commercial banking products and services in Puerto Rico, the United States, and British Virgin Islands.

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Rewards

  • Trading at 60.9% below our estimate of its fair value

  • Earnings grew by 18% over the past year

Risks

  • Earnings are forecast to decline by an average of 25% per year for the next 3 years

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