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 shareholders might well want to know whether insiders have been buying or selling shares in TowneBank (NASDAQ:TOWN).
What Is Insider Selling?
It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, rules govern insider transactions, and certain disclosures are required.
Insider transactions are not the most important thing when it comes to long-term investing. But equally, we would consider it foolish to ignore insider transactions altogether. 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.’
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TowneBank Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider purchase was by Robert Hatley for US$6.2m worth of shares, at about US$31.20 per share. So it’s clear an insider wanted to buy, even at a higher price. Their view may have changed since then, but at least it shows they felt optimistic at the time. We generally consider it a positive if insiders have been buying on market, even above the current price. Notably Robert Hatley was also the biggest seller, having sold US$5.0m worth of shares.
Happily, we note that in the last year insiders paid US$15m for 494.42k shares. But they sold 160.13k for US$5.0m. Overall, TowneBank insiders were net buyers last year. The average buy price was around US$30.94. This is nice to see since it implies that insiders might see value around current prices (around US$25.76). You can see a visual depiction of insider transactions (by individuals) over the last 12 months, below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
I will like TowneBank better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
TowneBank Insiders Are Selling The Stock
There was substantially more insider selling, than buying, of TowneBank shares over the last three months. In that time, insiders dumped US$2.3m worth of shares. Meanwhile insiders bought US$259k worth. We don’t view these transactions as a positive sign.
Does TowneBank Boast High Insider Ownership?
Many investors like to check how much of a company is owned by insiders. We usually like to see fairly high levels of insider ownership. It’s great to see that TowneBank insiders own 11% of the company, worth about US$200m. Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.
So What Does This Data Suggest About TowneBank Insiders?
The insider sales have outweighed the insider buying, at TowneBank, in the last three months. But we take heart from prior transactions. We are also comforted by the high levels of insider ownership. So the recent selling doesn’t worry us. Of course, the future is what matters most. So if you are interested in TowneBank, you should check out this free report on analyst forecasts for the company.
But note: TowneBank 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.