Want to participate in a short research study? Help shape the future of investing tools and earn a $40 gift card!
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 shareholders might well want to know whether insiders have been buying or selling shares in Simmons First National Corporation (NASDAQ:SFNC).
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 don't think shareholders should simply follow insider transactions. 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'.
Simmons First National Insider Transactions Over The Last Year
The Non Independent Chairman & CEO George Makris made the biggest insider purchase in the last 12 months. That single transaction was for US$330k worth of shares at a price of US$24.45 each. That means that even when the share price was higher than US$15.90 (the recent price), an insider wanted to purchase shares. It's very possible they regret the purchase, but it's more likely they are bullish about the company. 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.
Over the last year, we can see that insiders have bought 61.52k shares worth US$1.2m. But insiders sold 1.01k shares worth US$25k. Overall, Simmons First National insiders were net buyers during the last year. Their average price was about US$19.31. I'd consider this a positive as it suggests insiders see value at around the current price. You can see the insider transactions (by companies and 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!
Simmons First National is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Simmons First National Insiders Bought Stock Recently
Over the last three months, we've seen significant insider buying at Simmons First National. Overall, two insiders shelled out US$619k for shares in the company -- and none sold. That shows some optimism about the company's future.
Does Simmons First National Boast High Insider Ownership?
Many investors like to check how much of a company is owned by 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. Simmons First National insiders own about US$30m worth of shares. That equates to 1.7% of the company. While this is a strong but not outstanding level of insider ownership, it's enough to indicate some alignment between management and smaller shareholders.
What Might The Insider Transactions At Simmons First National Tell Us?
It is good to see recent purchasing. And the longer term insider transactions also give us confidence. Insiders likely see value in Simmons First National shares, given these transactions (along with notable insider ownership of the company). While we like knowing what's going on with the insider's ownership and transactions, we make sure to also consider what risks are facing a stock before making any investment decision. To that end, you should learn about the 2 warning signs we've spotted with Simmons First National (including 1 which shouldn't be ignored).
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.
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 firstname.lastname@example.org.