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 before you buy or sell Capstar Financial Holdings, Inc. (NASDAQ:CSTR), you may well want to know whether insiders have been buying or selling.
What Is Insider Buying?
Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock in the company. However, rules govern insider transactions, and certain disclosures are required.
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. 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'.
Capstar Financial Holdings Insider Transactions Over The Last Year
The Chief Financial Officer Denis Duncan made the biggest insider purchase in the last 12 months. That single transaction was for US$150k worth of shares at a price of US$13.49 each. That means that an insider was happy to buy shares at around the current price of US$16.08. Of course they may have changed their mind. But this suggests they are optimistic. We do always like to see insider buying, but it is worth noting if those purchases were made at well below today's share price, as the discount to value may have narrowed with the rising price. In this case we're pleased to report that the insider purchases were made at close to current prices.
While Capstar Financial Holdings insiders bought shares during the last year, they didn't sell. The average buy price was around US$11.96. To my mind it is good that insiders have invested their own money in the company. But we must note that the investments were made at well below today's share price. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
Capstar Financial Holdings is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Insiders at Capstar Financial Holdings Have Bought Stock Recently
Over the last three months, we've seen significant insider buying at Capstar Financial Holdings. Specifically, Chief Financial Officer Denis Duncan bought US$150k worth of shares in that time, and we didn't record any sales whatsoever. This could be interpreted as suggesting a positive outlook.
Insider Ownership of Capstar Financial Holdings
For a common shareholder, it is worth checking how many shares are held by company 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. It appears that Capstar Financial Holdings insiders own 23% of the company, worth about US$82m. 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 Does This Data Suggest About Capstar Financial Holdings Insiders?
It is good to see the recent insider purchase. And the longer term insider transactions also give us confidence. Insiders likely see value in Capstar Financial Holdings shares, given these transactions (along with notable insider ownership of the company). So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. To assist with this, we've discovered 2 warning signs that you should run your eye over to get a better picture of Capstar Financial Holdings.
Of course Capstar Financial Holdings 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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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.
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