Read This Before Selling MainStreet Bancshares, Inc. (NASDAQ:MNSB) Shares

We often see insiders buying up shares in companies that perform well over the long term. 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 we'll take a look at whether insiders have been buying or selling shares in MainStreet Bancshares, Inc. (NASDAQ:MNSB).

Do Insider Transactions Matter?

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, most countries require that the company discloses such transactions to the market.

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 Harvard University study found that 'insider purchases earn abnormal returns of more than 6% per year'.

See our latest analysis for MainStreet Bancshares

MainStreet Bancshares Insider Transactions Over The Last Year

In the last twelve months, the biggest single purchase by an insider was when Independent Director Terry Saeger bought US$136k worth of shares at a price of US$22.72 per share. So it's clear an insider wanted to buy, even at a higher price than the current share price (being US$16.17). Their view may have changed since then, but at least it shows they felt optimistic at the time. To us, it's very important to consider the price insiders pay for 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. We note that Terry Saeger was both the biggest buyer and the biggest seller.

Over the last year, we can see that insiders have bought 13.89k shares worth US$254k. On the other hand they divested 6.00k shares, for US$135k. In total, MainStreet Bancshares insiders bought more than they sold over the last year. Their average price was about US$18.29. This is nice to see since it implies that insiders might see value around current prices. 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!

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.

Does MainStreet Bancshares Boast High 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. We usually like to see fairly high levels of insider ownership. Our data indicates that MainStreet Bancshares insiders own about US$8.3m worth of shares (which is 7.0% of the company). Whilst better than nothing, we're not overly impressed by these holdings.

So What Does This Data Suggest About MainStreet Bancshares Insiders?

It doesn't really mean much that no insider has traded MainStreet Bancshares shares in the last quarter. But insiders have shown more of an appetite for the stock, over the last year. While we have no worries about the insider transactions, we'd be more comfortable if they owned more MainStreet Bancshares stock. 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 help with this, we've discovered 2 warning signs (1 shouldn't be ignored!) that you ought to be aware of before buying any shares in MainStreet Bancshares.

Of course MainStreet 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.

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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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