We often see insiders buying up shares in companies that perform well over the long term. On the other hand, we'd be remiss not to mention that insider sales have been known to precede tough periods for a business. So shareholders might well want to know whether insiders have been buying or selling shares in SmartFinancial, Inc. (NASDAQ:SMBK).
What Is Insider Selling?
It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, most countries require that the company discloses such transactions to the market.
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 SmartFinancial
The Independent Director Ted Miller made the biggest insider purchase in the last 12 months. That single transaction was for US$190k worth of shares at a price of US$19.01 each. That means that even when the share price was higher than US$18.12 (the recent price), an insider wanted to purchase shares. It's very possible they regret the purchase, but it's more likely they are bullish about the company. We always take careful note of the price insiders pay when purchasing shares. Generally speaking, it catches our eye when insiders have purchased shares at above current prices, as it suggests they believed the shares were worth buying, even at a higher price.
In the last twelve months insiders purchased 30.35k shares for US$541k. But insiders sold 10.00k shares worth US$189k. In total, SmartFinancial insiders bought more than they sold over the last year. 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!
SmartFinancial 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.
Insiders at SmartFinancial Have Bought Stock Recently
We saw some SmartFinancial insider buying shares in the last three months. Chairman of the Board Wesley Welborn shelled out US$26k for shares in that time. We like it when there are only buyers, and no sellers. However, in this case the amount invested recently is quite small.
Does SmartFinancial 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. A high insider ownership often makes company leadership more mindful of shareholder interests. It appears that SmartFinancial insiders own 11% of the company, worth about US$29m. While this is a strong but not outstanding level of insider ownership, it's enough to indicate some alignment between management and smaller shareholders.
So What Do The SmartFinancial Insider Transactions Indicate?
Insider purchases may have been minimal, in the last three months, but there was no selling at all. Overall the buying isn't worth writing home about. However, our analysis of transactions over the last year is heartening. Insiders own shares in SmartFinancial and we see no evidence to suggest they are worried about the future. 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. In terms of investment risks, we've identified 2 warning signs with SmartFinancial and understanding these should be part of your investment process.
Of course SmartFinancial 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.
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