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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 First Financial Bankshares, Inc. (NASDAQ:FFIN).
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, rules govern insider transactions, and certain disclosures are required.
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 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 First Financial Bankshares
In the last twelve months, the biggest single purchase by an insider was when Director Johnny Trotter bought US$514k worth of shares at a price of US$45.12 per share. Even though the purchase was made at a significantly lower price, we still think insider buying is a positive. It may not shed much light on insider confidence at the current share price.
In the last twelve months insiders purchased 17.15k shares for US$778k. On the other hand they divested 8.83k shares, for US$451k. Overall, First Financial Bankshares insiders were net buyers last year. Their average price was about US$45.39. To my mind it is good 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 individuals) over the last 12 months, below. By clicking on the graph below, you can see the precise details of each insider transaction!
If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).
Insider Ownership of First Financial Bankshares
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. First Financial Bankshares insiders own about US$198m worth of shares (which is 4.7% of the company). This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.
So What Do The First Financial Bankshares Insider Transactions Indicate?
The fact that there have been no First Financial Bankshares insider transactions recently certainly doesn’t bother us. However, our analysis of transactions over the last year is heartening. With high insider ownership and encouraging transactions, it seems like First Financial Bankshares insiders think the business has merit. If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its future.
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.
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.