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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 we’ll take a look at whether insiders have been buying or selling shares in Berkshire Hills Bancorp, Inc. (NYSE:BHLB).
What Is Insider Selling?
It’s quite normal to see company insiders, such as board members, trading in company stock, from time to time. However, rules govern insider transactions, and certain disclosures are required.
We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. But logic dictates you should pay some attention to whether insiders are buying or selling shares. 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 Berkshire Hills Bancorp
Over the last year, we can see that the biggest insider sale was by the , Patrick Sheehan, for US$1.9m worth of shares, at about US$30.85 per share. That means that an insider was selling shares at around the current price of US$29.69. We generally don’t like to see insider selling, but the lower the sale price, the more it concerns us. Given that the sale took place at around current prices, it makes us a little cautious but is hardly a major concern.
Over the last year, we can see that insiders have bought 10762 shares worth US$305k. On the other hand they divested 103k shares, for US$3.2m. All up, insiders sold more shares in Berkshire Hills Bancorp than they bought, over the last year. You can see the insider transactions (by individuals) over the last year depicted in the chart below. By clicking on the graph below, you can see the precise details of each insider transaction!
If you like to buy stocks that insiders are buying, rather than selling, then you might just love this free list of companies. (Hint: insiders have been buying them).
Insiders at Berkshire Hills Bancorp Have Sold Stock Recently
Over the last three months, we’ve seen notably more insider selling, than insider buying, at Berkshire Hills Bancorp. In that time, Patrick Sheehan dumped US$3.1m worth of shares. On the flip side, insiders spent US$43k on purchasing shares. Since the selling really does outweigh the buying, we’d say that these transactions may suggest that some insiders feel the shares are not cheap.
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. I reckon it’s a good sign if insiders own a significant number of shares in the company. Berkshire Hills Bancorp insiders own about US$86m worth of shares. That equates to 6.4% of the company. We’ve certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.
So What Do The Berkshire Hills Bancorp Insider Transactions Indicate?
Unfortunately, there has been more insider selling of Berkshire Hills Bancorp stock, than buying, in the last three months. Despite some insider buying, the longer term picture doesn’t make us feel much more positive. But since Berkshire Hills Bancorp is profitable and growing, we’re not too worried by this. Insider ownership isn’t particularly high, so this analysis makes us cautious about the company. We’re in no rush to buy! If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its future.
But note: Berkshire Hills Bancorp 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.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.