Should You Take Comfort From Insider Transactions At Banc of California, Inc. (NYSE:BANC)?

By
Simply Wall St
Published
October 14, 2020
NYSE:BANC

It is not uncommon to see companies perform well in the years after insiders buy shares. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So we'll take a look at whether insiders have been buying or selling shares in Banc of California, Inc. (NYSE:BANC).

What Is Insider Buying?

It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, such insiders must disclose their trading activities, and not trade on inside information.

We don't think shareholders should simply follow insider transactions. But logic dictates you should pay some attention to whether insiders are buying or selling shares. 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'.

Check out our latest analysis for Banc of California

The Last 12 Months Of Insider Transactions At Banc of California

Over the last year, we can see that the biggest insider purchase was by President Jared Wolff for US$251k worth of shares, at about US$15.18 per share. That means that even when the share price was higher than US$11.17 (the recent price), an insider wanted to purchase shares. Their view may have changed since then, but at least it shows they felt optimistic at the time. In our view, the price an insider pays for shares is very important. 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 Banc of California insiders were buying shares, but not selling. Their average price was about US$12.64. I'd consider this a positive as it suggests insiders see value at around the current price. You can see the insider transactions (by companies and 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!

insider-trading-volume
NYSE:BANC Insider Trading Volume October 14th 2020

Banc of California is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.

Insider Ownership of Banc of California

For a common shareholder, it is worth checking how many shares are held by company insiders. I reckon it's a good sign if insiders own a significant number of shares in the company. Our data indicates that Banc of California insiders own about US$6.0m worth of shares (which is 1.1% of the company). Whilst better than nothing, we're not overly impressed by these holdings.

So What Does This Data Suggest About Banc of California Insiders?

It doesn't really mean much that no insider has traded Banc of California shares in the last quarter. On a brighter note, the transactions over the last year are encouraging. The transactions are fine but it'd be more encouraging if Banc of California insiders bought more shares in the company. 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. Every company has risks, and we've spotted 1 warning sign for Banc of California you should know about.

But note: Banc of California 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, but not derivative transactions.

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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. 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.
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