Insiders Rewarded With US$304k Addition To Investment As First Internet Bancorp Stock Hits US$172m

First Internet Bancorp (NASDAQ:INBK) insiders who bought shares over the past year were rewarded handsomely last week. The stock rose 10%, resulting in a US$16m rise in the company's market capitalisation, translating to a gain of 61% on their initial investment. Put another way, the original US$500.4k acquisition is now worth US$804.8k.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, logic dictates you should pay some attention to whether insiders are buying or selling shares.

See our latest analysis for First Internet Bancorp

First Internet Bancorp Insider Transactions Over The Last Year

In the last twelve months, the biggest single purchase by an insider was when Independent Director Aasif Bade bought US$108k worth of shares at a price of US$10.76 per share. Even though the purchase was made at a significantly lower price than the recent price (US$20.12), we still think insider buying is a positive. While it does suggest insiders consider the stock undervalued at lower prices, this transaction doesn't tell us much about what they think of current prices.

First Internet Bancorp insiders may have bought shares in the last year, but they didn't sell any. Their average price was about US$12.51. It is certainly positive to see that insiders have invested their own money in the company. However, we do note that they were buying at significantly lower prices than today's share price. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. By clicking on the graph below, you can see the precise details of each insider transaction!

There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of growing companies that insiders are buying.

Insider Ownership Of First Internet Bancorp

Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. First Internet Bancorp insiders own about US$16m worth of shares. That equates to 9.6% of the company. 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 First Internet Bancorp Insiders?

The fact that there have been no First Internet Bancorp insider transactions recently certainly doesn't bother us. However, our analysis of transactions over the last year is heartening. Overall we don't see anything to make us think First Internet Bancorp insiders are doubting the company, and they do own shares. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. Case in point: We've spotted 1 warning sign for First Internet Bancorp you should be aware of.

But note: First Internet Bancorp 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 of direct interests only, but not derivative transactions or indirect interests.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.