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 Orrstown Financial Services, Inc. (NASDAQ:ORRF).
What Is Insider Buying?
It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, such insiders must disclose their trading activities, and not trade on inside information.
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'.
The Last 12 Months Of Insider Transactions At Orrstown Financial Services
In the last twelve months, the biggest single sale by an insider was when the insider, David Boyle, sold US$71k worth of shares at a price of US$23.50 per share. While we don't usually like to see insider selling, it's more concerning if the sales take place at a lower price. The good news is that this large sale was at well above current price of US$12.85. So it is hard to draw any strong conclusion from it.
In the last twelve months insiders purchased 8.69k shares for US$132k. On the other hand they divested 4.50k shares, for US$96k. In the last twelve months there was more buying than selling by Orrstown Financial Services insiders. The chart below shows insider transactions (by companies and individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
Orrstown Financial Services is not the only stock that insiders are buying. For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.
Are Orrstown Financial Services Insiders Buying Or Selling?
Over the last three months, we've seen a bit of insider selling at Orrstown Financial Services. US$14k worth of shares were sold by Independent Chairman of the Board Joel Zullinger. But at least we saw US$7.4k worth of buying. While it's not great to see insider selling, the net amount sold isn't enough for us to want to read anything into it.
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. From our data, it seems that Orrstown Financial Services insiders own 4.3% of the company, worth about US$6.2m. We do note, however, it is possible insiders have an indirect interest through a private company or other corporate structure. We do generally prefer see higher levels of insider ownership.
So What Do The Orrstown Financial Services Insider Transactions Indicate?
Insider selling has just outweighed insider buying in the last three months. But the difference is small, and thus, not concerning. On a brighter note, the transactions over the last year are encouraging. While we have no worries about the insider transactions, we'd be more comfortable if they owned more Orrstown Financial Services stock. While we like knowing what's going on with the insider's ownership and transactions, we make sure to also consider what risks are facing a stock before making any investment decision. When we did our research, we found 2 warning signs for Orrstown Financial Services (1 is concerning!) that we believe deserve your full attention.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting 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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