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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 Community Bank System, Inc. (NYSE:CBU).
Do Insider Transactions Matter?
It’s quite normal to see company insiders, such as board members, trading in company stock, from time to time. However, most countries require that the company discloses such transactions to the market.
We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. 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.’
Community Bank System Insider Transactions Over The Last Year
The Director, Eric Stickels, made the biggest insider sale in the last 12 months. That single transaction was for US$788k worth of shares at a price of US$60.30 each. So it’s clear an insider wanted to take some cash off the table, even below the current price of US$66.31. As a general rule we consider it to be discouraging when insiders are selling below the current price, because it suggests they were happy with a lower valuation. Please do note, however, that sellers may have a variety of reasons for selling, so we don’t know for sure what they think of the stock price. This single sale was just 21.2% of Eric Stickels’s stake.
Over the last year, we note insiders sold 36562 shares worth US$2.2m. Insiders in Community Bank System didn’t buy any shares in the last year. The chart below shows insider transactions (by individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
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).
Community Bank System Insiders Are Selling The Stock
The last three months saw significant insider selling at Community Bank System. In total, Director Michael Kallet dumped US$420k worth of shares in that time, and we didn’t record any purchases whatsoever. Overall this makes us a bit cautious, but it’s not the be all and end all.
Insider Ownership of Community Bank System
Many investors like to check how much of a company is owned by insiders. I reckon it’s a good sign if insiders own a significant number of shares in the company. It appears that Community Bank System insiders own 1.5% of the company, worth about US$50m. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.
So What Does This Data Suggest About Community Bank System Insiders?
An insider sold Community Bank System shares recently, but they didn’t buy any. And there weren’t any purchases to give us comfort, over the last year. On the plus side, Community Bank System makes money, and is growing profits. While insiders do own shares, they don’t own a heap, and they have been selling. So we’d only buy after careful consideration. Of course, the future is what matters most. So if you are interested in Community Bank System, you should check out this free report on analyst forecasts for the company.
But note: Community Bank System 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.