- Oops!Something went wrong.Please try again later.
We've lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So we'll take a look at whether insiders have been buying or selling shares in CF Bankshares Inc. (NASDAQ:CFBK).
What Is Insider Buying?
Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock in the company. However, such insiders must disclose their trading activities, and not trade on inside information.
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'.
The Last 12 Months Of Insider Transactions At CF Bankshares
In the last twelve months, the biggest single purchase by an insider was when Independent Director David Royer bought US$74k worth of shares at a price of US$10.50 per share. Although we like to see insider buying, we note that this large purchase was at significantly below the recent price of US$19.99. 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 CF Bankshares insiders were buying shares, but not selling. They paid about US$12.74 on average. It is certainly positive to see that insiders have invested their own money in the company. But we must note that the investments were made at well below today's share price. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
CF Bankshares is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Insiders at CF Bankshares Have Bought Stock Recently
It's good to see that CF Bankshares insiders have made notable investments in the company's shares. Overall, two insiders shelled out US$54k for shares in the company -- and none sold. This could be interpreted as suggesting a positive outlook.
Insider Ownership of CF Bankshares
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. We usually like to see fairly high levels of insider ownership. Insiders own 12% of CF Bankshares shares, worth about US$16m. 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 Does This Data Suggest About CF Bankshares Insiders?
It is good to see recent purchasing. We also take confidence from the longer term picture of insider transactions. Given that insiders also own a fair bit of CF Bankshares we think they are probably pretty confident of a bright future. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing CF Bankshares. Be aware that CF Bankshares is showing 3 warning signs in our investment analysis, and 1 of those doesn't sit too well with us...
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.
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.
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. 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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.