We’ve lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So we’ll take a look at whether insiders have been buying or selling shares in Independent Bank Corporation (NASDAQ:IBCP).
What Is Insider Buying?
It’s quite normal to see company insiders, such as board members, trading in company stock, from time to time. However, most countries require that the company discloses such transactions to the market.
We don’t think shareholders should simply follow insider transactions. But it is perfectly logical to keep tabs on what insiders are doing. 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.’
Independent Bank Insider Transactions Over The Last Year
In the last twelve months, the biggest single sale by an insider was when the Chairman of the Board, Michael Magee, sold US$372k worth of shares at a price of US$24.85 per share. That means that an insider was selling shares at around the current price of US$22.18. We generally don’t like to see insider selling, but the lower the sale price, the more it concerns us. In this case, the big sale took place at around the current price, so it’s not too bad (but it’s still not a positive). Notably Michael Magee was also the biggest buyer, having purchased US$111k worth of shares.
Over the last year, we can see that insiders have bought 4892 shares worth US$111k. On the other hand they divested 22496 shares, for US$551k. In total, Independent Bank insiders sold more than they bought over the last year. The chart below shows insider transactions (by individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
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 Independent Bank Have Sold Stock Recently
The last three months saw significant insider selling at Independent Bank. In total, Executive VP Robert Shuster dumped US$122k 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.
Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. A high insider ownership often makes company leadership more mindful of shareholder interests. Independent Bank insiders own about US$16m worth of shares. That equates to 3.0% 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 Independent Bank Insider Transactions Indicate?
An insider sold stock recently, but they haven’t been buying. Zooming out, the longer term picture doesn’t give us much comfort. But since Independent Bank is profitable and growing, we’re not too worried by this. Insider ownership isn’t particularly high, so this analysis makes us cautious about the company. We’d think twice before buying! Of course, the future is what matters most. So if you are interested in Independent Bank, you should check out this free report on analyst forecasts for the company.
Of course Independent Bank may not be the best stock to buy. So you may wish to see this free collection of high quality companies.
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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. Thank you for reading.