This Insider Has Just Sold Shares In TowneBank

Anyone interested in TowneBank (NASDAQ:TOWN) should probably be aware that a company insider, Jacqueline Amato, recently divested US$425k worth of shares in the company, at an average price of US$35.40 each. That sale was 10% of their holding, so it does make us raise an eyebrow.

View our latest analysis for TowneBank

TowneBank Insider Transactions Over The Last Year

The Independent Director, Elizabeth Robertson, made the biggest insider sale in the last 12 months. That single transaction was for US$453k worth of shares at a price of US$27.63 each. That means that an insider was selling shares at slightly below the current price (US$35.25). When an insider sells below the current price, it suggests that they considered that lower price to be fair. That makes us wonder what they think of the (higher) recent valuation. While insider selling is not a positive sign, we can't be sure if it does mean insiders think the shares are fully valued, so it's only a weak sign. This single sale was just 21% of Elizabeth Robertson's stake.

Happily, we note that in the last year insiders paid US$1.8m for 64.98k shares. On the other hand they divested 99.49k shares, for US$3.1m. All up, insiders sold more shares in TowneBank than they bought, over the last year. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. By clicking on the graph below, you can see the precise details of each insider transaction!

I will like TowneBank better if I see some big insider buys. While we wait, check out this free list of undervalued and small cap stocks with considerable, recent, insider buying.

Insider Ownership Of TowneBank

Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. We usually like to see fairly high levels of insider ownership. TowneBank insiders own 7.3% of the company, currently worth about US$191m based on the recent share price. 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. Despite some insider buying, the longer term picture doesn't make us feel much more positive. 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. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. While conducting our analysis, we found that TowneBank has 1 warning sign and it would be unwise to ignore it.

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.

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 of direct interests only, but not derivative transactions or indirect interests.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.