Prosperity Bancshares, Inc. (NYSE:PB) Insiders Have Been Selling

We often see insiders buying up shares in companies that perform well over the long term. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So shareholders might well want to know whether insiders have been buying or selling shares in Prosperity Bancshares, Inc. (NYSE:PB).

Do Insider Transactions Matter?

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.

Insider transactions are not the most important thing when it comes to long-term investing. But it is perfectly logical to keep tabs on what insiders are doing. For example, a Harvard University study found that ‘insider purchases earn abnormal returns of more than 6% per year.’

See our latest analysis for Prosperity Bancshares

Prosperity Bancshares Insider Transactions Over The Last Year

In the last twelve months, the biggest single sale by an insider was when Director Ned Holmes sold US$3.7m worth of shares at a price of US$74.64 per share. So what is clear is that an insider saw fit to sell at around the current price of US$65.45. While their view may have changed since the sale, this is not a particularly positive fact. Arguably, insider selling at around current prices should give us reason to reflect on whether the stock is fully valued at the moment.

Over the last year we saw more insider selling of Prosperity Bancshares shares, than buying. They sold for an average price of about US$73.72. It’s not too encouraging to see that insiders have sold at below the current price. Since insiders sell for many reasons, we wouldn’t put too much weight on it. 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!

NYSE:PB Insider Trading January 7th 19
NYSE:PB Insider Trading January 7th 19

If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).

Insiders at Prosperity Bancshares Have Bought Stock Recently

At Prosperity Bancshares,over the last quarter, we have observed quite a lot more insider buying than insider selling. In total, H. Timanus bought US$584k worth of shares in that time. On the other hand, Director Robert Steelhammer netted US$370k by selling. The buying outweighs the selling, which suggests that insiders may believe the company will do well in the future.

Insider Ownership

For a common shareholder, it is worth checking how many shares are held by company insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. Prosperity Bancshares insiders own 5.2% of the company, currently worth about US$236m based on the recent share price. I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.

So What Do The Prosperity Bancshares Insider Transactions Indicate?

It’s certainly positive to see the recent insider purchase. On the other hand the transaction history, over the last year, isn’t so positive. Overall, we’d prefer see a more sustained buying from directors, but with a significant insider holding and more recent purchases, Prosperity Bancshares insiders are reasonably well aligned, and optimistic for the future. Of course, the future is what matters most. So if you are interested in Prosperity Bancshares, you should check out this free report on analyst forecasts for the company.

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.

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.