Stock Analysis

Trade Alert: The Independent Director Of Preferred Bank (NASDAQ:PFBC), Wayne Wu, Has Sold Some Shares Recently

  •  Updated
Source: Shutterstock

Some Preferred Bank (NASDAQ:PFBC) shareholders may be a little concerned to see that the Independent Director, Wayne Wu, recently sold a substantial US$930k worth of stock at a price of US$62.02 per share. That diminished their holding by a very significant 100%, which arguably implies a strong desire to reallocate capital.

Check out our latest analysis for Preferred Bank

The Last 12 Months Of Insider Transactions At Preferred Bank

Notably, that recent sale by Wayne Wu is the biggest insider sale of Preferred Bank shares that we've seen in the last year. That means that an insider was selling shares at slightly below the current price (US$64.93). As a general rule we consider it to be discouraging when insiders are selling below the current price, because it suggests they were happy with a lower valuation. However, while insider selling is sometimes discouraging, it's only a weak signal. It is worth noting that this sale was 100% of Wayne Wu's holding.

Happily, we note that in the last year insiders paid US$245k for 6.10k shares. But insiders sold 19.00k shares worth US$1.1m. Over the last year we saw more insider selling of Preferred Bank shares, than buying. The sellers received a price of around US$58.64, on average. It's not too encouraging to see that insiders have sold at below the current price. But we wouldn't put too much weight on the insider selling. 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!

NasdaqGS:PFBC Insider Trading Volume March 9th 2021

I will like Preferred Bank better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.

Does Preferred Bank Boast High Insider Ownership?

Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. We usually like to see fairly high levels of insider ownership. Preferred Bank insiders own about US$80m worth of shares. That equates to 8.5% of the company. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.

What Might The Insider Transactions At Preferred Bank Tell Us?

The stark truth for Preferred Bank is that there has been more insider selling than insider buying in the last three months. Zooming out, the longer term picture doesn't give us much comfort. While insiders do own shares, they don't own a heap, and they have been selling. We're in no rush to buy! So while it's helpful to know what insiders are doing in terms of buying or selling, it's also helpful to know the risks that a particular company is facing. Case in point: We've spotted 3 warning signs for Preferred Bank you should be aware of.

Of course Preferred Bank 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.

When trading Preferred Bank or any other investment, use the platform considered by many to be the Professional's Gateway to the Worlds Market, Interactive Brokers. You get the lowest-cost* trading on stocks, options, futures, forex, bonds and funds worldwide from a single integrated account. Promoted

Valuation is complex, but we're helping make it simple.

Find out whether Preferred Bank is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

View the Free Analysis