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 Citi Trends, Inc. (NASDAQ:CTRN), you may well want to know whether insiders have been buying or selling.
What Is Insider Selling?
It’s quite normal to see company insiders, such as board members, trading in company stock, from time to time. 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 it is perfectly logical to keep tabs on what insiders are doing. 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’.
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The Last 12 Months Of Insider Transactions At Citi Trends
Over the last year, we can see that the biggest insider sale was by Senior Vice President of Store Operations James Dunn for US$424k worth of shares, at about US$30.97 per share. That is hardly a positive sign, even though it took place above the latest price (US$20.61). So it may not tell us anything about how insiders feel about the current share price.
Over the last year, we note insiders sold 26.33k shares worth US$823k. In total, Citi Trends insiders sold more than they bought over the last year. The sellers received a price of around US$31.24, on average. We are not joyful about insider selling. However, we do note that the average sale price was significantly higher than the current share price (which is US$20.61). 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!
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Does Citi Trends Boast High Insider Ownership?
Many investors like to check how much of a company is owned by insiders. I reckon it’s a good sign if insiders own a significant number of shares in the company. It appears that Citi Trends insiders own 5.7% of the company, worth about US$15m. 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 Citi Trends Insider Transactions Indicate?
There haven’t been any insider transactions in the last three months — that doesn’t mean much. Still, the insider transactions at Citi Trends in the last 12 months are not very heartening. The modest level of insider ownership is, at least, some comfort. To put this in context, take a look at how a company has performed in the past. You can access this detailed graph of past earnings, revenue and cash flow .
Of course Citi Trends may not be the best stock to buy. So you may wish to see this free collection of high quality companies.
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 firstname.lastname@example.org.