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 shareholders might well want to know whether insiders have been buying or selling shares in Northrim BanCorp, Inc. (NASDAQ:NRIM).
What Is Insider Buying?
It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, most countries require that the company discloses such transactions to the market.
We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. 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.’
The Last 12 Months Of Insider Transactions At Northrim BanCorp
Over the last year, we can see that the biggest insider sale was by Director David Wight for US$88k worth of shares, at about US$44.15 per share. So we know that an insider sold shares at around the present share price of US$37.03. They could have a variety of motivations for selling, but it’s still not particularly encouraging to see. We generally tread carefully if insiders have been selling on market, even if they sold slightly above the current price.
Happily, we note that in the last year insiders paid US$217k for 5.62k shares. But they sold 4.40k for US$180k. In total, Northrim BanCorp insiders bought more than they sold over the last year. The average buy price was around US$38.66. These transactions suggest that insiders have considered the current price of US$37.03 attractive. The chart below shows insider transactions (by individuals) over the last year. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).
Insiders at Northrim BanCorp Have Bought Stock Recently
Over the last three months, we’ve seen a bit of insider buying at Northrim BanCorp. Insiders bought US$32k worth of shares in that time. We like it when there are only buyers, and no sellers. But in this case the amount purchased means the recent transaction may not be very meaningful on its own.
Many investors like to check how much of a company is owned by 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. From our data, it seems that Northrim BanCorp insiders own 2.2% of the company, worth about US$5.5m. We do generally prefer see higher levels of insider ownership.
So What Do The Northrim BanCorp Insider Transactions Indicate?
Our data shows a little more insider buying than selling in the last three months. But the difference isn’t much. But insiders have shown more of an appetite for the stock, over the last year. The transactions are fine but it’d be more encouraging if Northrim BanCorp insiders bought more shares in the company. If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its future.
But note: Northrim 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.
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If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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.