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 before you buy or sell Signature Bank (NASDAQ:SBNY), you may well want to know whether insiders have been buying or selling.
What Is Insider Buying?
It’s quite normal to see company insiders, such as board members, trading in company stock, from time to time. However, most countries require that the company discloses such transactions to the market.
Insider transactions are not the most important thing when it comes to long-term investing. But it is perfectly logical to keep tabs on what insiders are doing. As Peter Lynch said, ‘insiders might sell their shares for any number of reasons, but they buy them for only one: they think the price will rise.’
Signature Bank Insider Transactions Over The Last Year
In the last twelve months, the biggest single sale by an insider was when Co-Founder Joseph DePaolo sold US$3.7m worth of shares at a price of US$144 per share. That is hardly a positive sign, even though it took place above the latest price (US$103). So it may not tell us anything about how insiders feel about the current share price.
In the last twelve months insiders purchased 29.75k shares for US$1.3m. But they sold 137.34k for US$19m. All up, insiders sold more shares in Signature Bank than they bought, over the last year. The sellers received a price of around US$141, on average. Insider selling doesn’t make us excited to buy. But the selling was at much higher prices than the current share price (US$103), so it probably doesn’t tell us a lot about the value on offer today. You can see a visual depiction of insider transactions over the last 12 months, below. By clicking on the graph below, you can see the precise details of each insider transaction!
For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.
Insiders at Signature Bank Have Sold Stock Recently
We’ve seen more insider selling than insider buying at Signature Bank recently. We note insiders cashed in US$541k worth of shares. Meanwhile Executive VP & COO Mark Sigona bought US$64k worth. Since the selling really does outweigh the buying, we’d say that these transactions may suggest that some insiders feel the company has been fully valued in recent months.
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Signature Bank insiders own 2.9% of the company, currently worth about US$162m based on the recent share price. This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.
What Might The Insider Transactions At Signature Bank Tell Us?
The stark truth for Signature Bank is that there has been more insider selling than insider buying in the last three months. Despite some insider buying, the longer term picture doesn’t make us feel much more positive. On the plus side, Signature Bank makes money, and is growing profits. While insiders do own a lot of shares in the company (which is good), our analysis of their transactions doesn’t make us feel confident about the company. Of course, the future is what matters most. So if you are interested in Signature Bank, you should check out this free report on analyst forecasts for the company.
But note: Signature Bank 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.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at email@example.com.