Several Insiders Invested In Potbelly Flagging Positive News

Usually, when one insider buys stock, it might not be a monumental event. But when multiple insiders are buying like they did in the case of Potbelly Corporation (NASDAQ:PBPB), that sends out a positive message to the company's shareholders.

Although we don't think shareholders should simply follow insider transactions, we do think it is perfectly logical to keep tabs on what insiders are doing.

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The Last 12 Months Of Insider Transactions At Potbelly

Over the last year, we can see that the biggest insider purchase was by insider David Nierenberg for US$208k worth of shares, at about US$9.36 per share. So it's clear an insider wanted to buy, even at a higher price than the current share price (being US$8.46). While their view may have changed since the purchase was made, this does at least suggest they have had confidence in the company's future. To us, it's very important to consider the price insiders pay for shares. As a general rule, we feel more positive about a stock if insiders have bought shares at above current prices, because that suggests they viewed the stock as good value, even at a higher price.

Potbelly insiders may have bought shares in the last year, but they didn't sell any. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. By clicking on the graph below, you can see the precise details of each insider transaction!

See our latest analysis for Potbelly

Potbelly is not the only stock insiders are buying. So take a peek at this free list of under-the-radar companies with insider buying.

Potbelly Insiders Bought Stock Recently

Over the last three months, we've seen significant insider buying at Potbelly. We can see that insider David Nierenberg paid US$208k for shares in the company. No-one sold. This makes one think the business has some good points.

Insider Ownership Of Potbelly

For a common shareholder, it is worth checking how many shares are held by company insiders. We usually like to see fairly high levels of insider ownership. Potbelly insiders own about US$34m worth of shares. That equates to 13% of the company. We've certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.

What Might The Insider Transactions At Potbelly Tell Us?

It's certainly positive to see the recent insider purchase. We also take confidence from the longer term picture of insider transactions. Given that insiders also own a fair bit of Potbelly we think they are probably pretty confident of a bright future. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. In terms of investment risks, we've identified 2 warning signs with Potbelly and understanding these should be part of your investment process.

But note: Potbelly 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 of direct interests only, but not derivative transactions or indirect interests.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.