Should You Take Comfort From Insider Transactions At Bassett Furniture Industries, Incorporated (NASDAQ:BSET)?

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 Bassett Furniture Industries, Incorporated (NASDAQ:BSET), you may well want to know whether insiders have been buying or selling.

Do Insider Transactions Matter?

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 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.’

View our latest analysis for Bassett Furniture Industries

The Last 12 Months Of Insider Transactions At Bassett Furniture Industries

In the last twelve months, the biggest single purchase by an insider was when Independent Director John Belk bought US$315k worth of shares at a price of US$20.99 per share. That means that an insider was happy to buy shares at above the current price of US$16.87. Their view may have changed since then, but at least it shows they felt optimistic at the time. We always take careful note of the price insiders pay when purchasing shares. Generally speaking, it catches our eye when insiders have purchased shares at above current prices, as it suggests they believed the shares were worth buying, even at a higher price.

In the last twelve months insiders purchased 20000 shares for US$400k. But insiders sold 910 shares worth US$16k. In the last twelve months there was more buying than selling by Bassett Furniture Industries insiders. 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!

NasdaqGS:BSET Recent Insider Trading, April 22nd 2019
NasdaqGS:BSET Recent Insider Trading, April 22nd 2019

There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of growing companies that insiders are buying.

Bassett Furniture Industries Insiders Bought Stock Recently

At Bassett Furniture Industries,over the last quarter, we have observed quite a lot more insider buying than insider selling. We can see that Lead Independent Director William Warden paid US$86k for shares in the company. But we did see Mark Jordan sell shares worth US$16k. The buying outweighs the selling, which suggests that insiders may believe the company will do well in the future.

Insider Ownership of Bassett Furniture Industries

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. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. From our data, it seems that Bassett Furniture Industries insiders own 5.5% of the company, worth about US$9.8m. Overall, this level of ownership isn’t that impressive, but it’s certainly better than nothing!

So What Does This Data Suggest About Bassett Furniture Industries Insiders?

It’s certainly positive to see the recent insider purchase. And the longer term insider transactions also give us confidence. On this analysis the only slight negative we see is the fairly low (overall) insider ownership; their transactions suggest that they are quite positive on Bassett Furniture Industries stock. 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.

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.

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 editorial-team@simplywallst.com. 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.