We often see insiders buying up shares in companies that perform well over the long term. 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 Selling?
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 would never suggest that investors should base their decisions solely on what the directors of a company have been doing. But it is perfectly logical to keep tabs on what insiders are doing. For example, a Harvard University study found that 'insider purchases earn abnormal returns of more than 6% per year'.
Northrim BanCorp Insider Transactions Over The Last Year
In the last twelve months, the biggest single sale by an insider was when the Independent Director, David Wight, sold US$65k worth of shares at a price of US$32.68 per share. So it's clear an insider wanted to take some cash off the table, even below the current price of US$43.93. We generally consider it a negative if insiders have been selling, especially if they did so below the current price, because it implies that they considered a lower price to be reasonable. Please do note, however, that sellers may have a variety of reasons for selling, so we don't know for sure what they think of the stock price. It is worth noting that this sale was only 13% of David Wight's holding. David Wight was the only individual insider to sell over the last year. Notably David Wight was also the biggest buyer, having purchased US$243k worth of shares.
Happily, we note that in the last year insiders paid US$243k for 9.36k shares. But insiders sold 2.00k shares worth US$65k. In the last twelve months there was more buying than selling by Northrim BanCorp insiders. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
Northrim BanCorp is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Insiders at Northrim BanCorp Have Bought Stock Recently
We saw some Northrim BanCorp insider buying shares in the last three months. Insiders bought US$32k worth of shares in that time. It's great to see that insiders are only buying, not selling. But in this case the amount purchased means the recent transaction may not be very meaningful on its own.
Does Northrim BanCorp 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. I reckon it's a good sign if insiders own a significant number of shares in the company. From our data, it seems that Northrim BanCorp insiders own 2.3% of the company, worth about US$6.0m. Whilst better than nothing, we're not overly impressed by these holdings.
So What Does This Data Suggest About Northrim BanCorp Insiders?
Insider purchases may have been minimal, in the last three months, but there was no selling at all. That said, the purchases were not large. On a brighter note, the transactions over the last year are encouraging. The transactions are fine but it'd be more encouraging if Northrim BanCorp insiders bought more shares in the company. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Northrim BanCorp. Every company has risks, and we've spotted 2 warning signs for Northrim BanCorp (of which 1 is potentially serious!) you should know about.
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.
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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