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 before you buy or sell Oak Valley Bancorp (NASDAQ:OVLY), you may well want to know whether insiders have been buying or selling.
Do Insider Transactions Matter?
It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, such insiders must disclose their trading activities, and not trade on inside information.
Insider transactions are not the most important thing when it comes to long-term investing. 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.'
The Last 12 Months Of Insider Transactions At Oak Valley Bancorp
In the last twelve months, the biggest single purchase by an insider was when insider H. Holder bought US$57k worth of shares at a price of US$19.00 per share. So it's clear an insider wanted to buy, even at a higher price than the current share price (being US$18.01). Their view may have changed since then, but at least it shows they felt optimistic at the time. To us, it's very important to consider the price insiders pay for shares. It is generally more encouraging if they paid above the current price, as it suggests they saw value, even at higher levels.
In the last twelve months insiders purchased 8799 shares for US$162k. On the other hand they divested 8187 shares, for US$150k. In the last twelve months there was more buying than selling by Oak Valley Bancorp insiders. You can see a visual depiction of insider transactions (by individuals) over the last 12 months, below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of growing companies that insiders are buying.
Insiders at Oak Valley Bancorp Have Sold Stock Recently
The last three months saw some Oak Valley Bancorp insider selling. US$22k worth of shares were sold by insiders. But Director James Gilbert spent US$4.1k on buying, too. While it's not great to see insider selling, the net amount sold isn't enough for us to want to read anything into it.
Insider Ownership of Oak Valley Bancorp
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. It appears that Oak Valley Bancorp insiders own 18% of the company, worth about US$26m. While this is a strong but not outstanding level of insider ownership, it's enough to indicate some alignment between management and smaller shareholders.
So What Do The Oak Valley Bancorp Insider Transactions Indicate?
Our data shows a little more insider selling than buying in the last three months. But the difference isn't enough to have us worried. But insiders have shown more of an appetite for the stock, over the last year. Insiders own shares in Oak Valley Bancorp and we see no evidence to suggest they are worried about the future. I like to dive deeper into how a company has performed in the past. You can find historic revenue and earnings in this detailed graph.
But note: Oak Valley Bancorp 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.
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.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at email@example.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.