Don't Ignore The Fact That This Insider Just Sold Some Shares In First Republic Bank (NYSE:FRC)

By
Simply Wall St
Published
October 19, 2020
NYSE:FRC

Some First Republic Bank (NYSE:FRC) shareholders may be a little concerned to see that the Chief Banking Officer & Senior EVP, Michael Selfridge, recently sold a substantial US$698k worth of stock at a price of US$127 per share. That sale reduced their total holding by 16% which is hardly insignificant, but far from the worst we've seen.

Check out our latest analysis for First Republic Bank

First Republic Bank Insider Transactions Over The Last Year

In the last twelve months, the biggest single sale by an insider was when the insider, Robert Thornton, sold US$6.2m worth of shares at a price of US$104 per share. That means that an insider was selling shares at slightly below the current price (US$127). 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. 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 86% of Robert Thornton's stake.

Insiders in First Republic Bank didn't buy any shares in the last year. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

insider-trading-volume
NYSE:FRC Insider Trading Volume October 19th 2020

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Insider Ownership

I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with insiders. I reckon it's a good sign if insiders own a significant number of shares in the company. First Republic Bank insiders own about US$187m worth of shares (which is 0.9% of the company). I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.

What Might The Insider Transactions At First Republic Bank Tell Us?

Insiders haven't bought First Republic Bank stock in the last three months, but there was some selling. And even if we look at the last year, we didn't see any purchases. But it is good to see that First Republic Bank is growing earnings. The company boasts high insider ownership, but we're a little hesitant, given the history of share sales. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing First Republic Bank. For example - First Republic Bank has 2 warning signs we think you should be aware of.

If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, that have HIGH return on equity 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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