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 before you buy or sell OFG Bancorp (NYSE:OFG), you may well want to know whether insiders have been buying or selling.
What Is Insider Selling?
It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. 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 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'.
OFG Bancorp Insider Transactions Over The Last Year
In the last twelve months, the biggest single purchase by an insider was when Vice Chairman Jose Fernandez bought US$259k worth of shares at a price of US$12.95 per share. Although we like to see insider buying, we note that this large purchase was at significantly below the recent price of US$21.91. While it does suggest insiders consider the stock undervalued at lower prices, this transaction doesn't tell us much about what they think of current prices.
In the last twelve months insiders purchased 49.98k shares for US$651k. On the other hand they divested 13.43k shares, for US$288k. In total, OFG Bancorp insiders bought more than they sold over the last year. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
OFG Bancorp 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 OFG Bancorp
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. Insiders own 1.6% of OFG Bancorp shares, worth about US$18m. 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 OFG Bancorp Insider Transactions Indicate?
It doesn't really mean much that no insider has traded OFG Bancorp shares in the last quarter. However, our analysis of transactions over the last year is heartening. Insiders do have a stake in OFG Bancorp and their transactions don't cause us concern. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing OFG Bancorp. For example - OFG Bancorp has 1 warning sign we think you should be aware of.
But note: OFG 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.
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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