It is not uncommon to see companies perform well in the years after insiders buy shares. 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 Civista Bancshares, Inc. (NASDAQ:CIVB).
Do Insider Transactions Matter?
It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, rules govern insider transactions, and certain disclosures are required.
We don't think shareholders should simply follow insider transactions. But equally, we would consider it foolish to ignore insider transactions altogether. For example, a Columbia University study found that 'insiders are more likely to engage in open market purchases of their own company’s stock when the firm is about to reveal new agreements with customers and suppliers'.
Civista Bancshares Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider purchase was by insider Gerald Wurm for US$204k worth of shares, at about US$19.85 per share. That means that an insider was happy to buy shares at above the current price of US$18.62. It's very possible they regret the purchase, but it's more likely they are bullish about the company. We always take careful note of the price insiders pay when purchasing shares. As a general rule, we feel more positive about a stock if insiders have bought shares at above current prices, because that suggests they viewed the stock as good value, even at a higher price.
In the last twelve months Civista Bancshares insiders were buying shares, but not selling. The average buy price was around US$16.97. These transactions show that insiders have confidence to invest their own money in the stock, albeit at slightly below the recent price. The chart below shows insider transactions (by companies and individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
There are always plenty of stocks that insiders are buying. So if that suits your style you could check each stock one by one or you could take a look at this free list of companies. (Hint: insiders have been buying them).
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. We usually like to see fairly high levels of insider ownership. Civista Bancshares insiders own about US$15m worth of shares. That equates to 5.0% 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 Civista Bancshares Tell Us?
It doesn't really mean much that no insider has traded Civista Bancshares shares in the last quarter. On a brighter note, the transactions over the last year are encouraging. Insiders do have a stake in Civista Bancshares and their transactions don't cause us concern. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Civista Bancshares. At Simply Wall St, we've found that Civista Bancshares has 3 warning signs (1 is potentially serious!) that deserve your attention before going any further with your analysis.
Of course Civista 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.
When trading Civista Bancshares or any other investment, use the platform considered by many to be the Professional's Gateway to the Worlds Market, Interactive Brokers. You get the lowest-cost* trading on stocks, options, futures, forex, bonds and funds worldwide from a single integrated account. Promoted
What are the risks and opportunities for Civista Bancshares?
Trading at 61.5% below our estimate of its fair value
Earnings are forecast to grow 13.83% per year
Shareholders have been diluted in the past year
Significant insider selling over the past 3 months
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. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.