It is not uncommon to see companies perform well in the years after insiders buy shares. The flip side of that is that there are more than a few examples of insiders dumping stock prior to a period of weak performance. So we’ll take a look at whether insiders have been buying or selling shares in Enterprise Financial Services Corp (NASDAQ:EFSC).
Do Insider Transactions Matter?
Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock on the market. However, most countries require that the company discloses such transactions to the market.
We don’t think shareholders should simply follow insider transactions. 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.’
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Enterprise Financial Services Insider Transactions Over The Last Year
Chairman of the Board John Eulich made the biggest insider purchase in the last 12 months. That single transaction was for US$458k worth of shares at a price of US$45.84 each. That means that an insider was happy to buy shares at above the current price. 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. It’s not at all bad to see insiders buy shares at or above current prices.
Happily, we note that in the last year insiders paid US$504k for 11.00k shares. On the other hand they divested 1.50k shares, for US$81k. Overall, Enterprise Financial Services insiders were net buyers last year. They paid about US$45.82 on average. I’d consider this a positive as it suggests insiders see value at around the current price, which is US$41.34. You can see the insider transactions (by individuals) over the last year depicted in the chart below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).
Enterprise Financial Services Insiders Bought Stock Recently
It’s good to see that Enterprise Financial Services insiders have made notable investments in the company’s shares. In total, insiders bought US$504k worth of shares in that time, and we didn’t record any sales whatsoever. This could be interpreted as suggesting a positive outlook.
For a common shareholder, it is worth checking how many shares are held by company 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. Enterprise Financial Services insiders own about US$25m worth of shares. That equates to 2.6% 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.
So What Do The Enterprise Financial Services Insider Transactions Indicate?
The recent insider purchases are heartening. And an analysis of the transactions over the last year also gives us confidence. Insiders likely see value in Enterprise Financial Services shares, given these transactions (along with notable insider ownership of the company). Of course, the future is what matters most. So if you are interested in Enterprise Financial Services, you should check out this free report on analyst forecasts for the company.
But note: Enterprise Financial Services 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.
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 email@example.com.