We’ve lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. 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 Sandy Spring Bancorp, Inc. (NASDAQ:SASR).
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 on the market. However, such insiders must disclose their trading activities, and not trade on inside information.
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 Columbia University study found that ‘insiders are more likely to engage in open market purchases of their own company’s stock when the firm is about to reveal new agreements with customers and suppliers’.
The Last 12 Months Of Insider Transactions At Sandy Spring Bancorp
Over the last year, we can see that the biggest insider sale was by Joseph Bracewell for US$2.0m worth of shares, at about US$39.25 per share. So we know that an insider sold shares at around the present share price of US$34.96. They might be selling for a variety of reasons, but it’s hard to argue this is a bullish sign. We usually pause to reflect on the potential that a stock has a high valuation, if insiders have been selling at around the current price.
Happily, we note that in the last year insiders paid US$84k for 2.63k shares. But they sold 197.76k for US$8.1m. Over the last year we saw more insider selling of Sandy Spring Bancorp shares, than buying. The average sell price was around US$41.06. We don’t gain confidence from insider selling below the recent share price. Since insiders sell for many reasons, we wouldn’t put too much weight on it. You can see the insider transactions (by 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!
Sandy Spring Bancorp 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.
Sandy Spring Bancorp Insiders Bought Stock Recently
Over the last three months, we’ve seen significant insider buying at Sandy Spring Bancorp. Overall, 3 insiders shelled out US$84k for shares in the company — and none sold. That shows some optimism about the company’s future.
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. Sandy Spring Bancorp insiders own about US$34m worth of shares. That equates to 2.8% of the company. We’ve certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.
So What Do The Sandy Spring Bancorp Insider Transactions Indicate?
The recent insider purchases are heartening. However, the longer term transactions are not so encouraging. While recent transactions indicate confidence in Sandy Spring Bancorp, insiders don’t own enough of the company to overcome our cautiousness about the longer term transactions. So they seem pretty well aligned, overall. 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: Sandy Spring 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.