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We often see insiders buying up shares in companies that perform well over the long term. On the other hand, we'd be remiss not to mention that insider sales have been known to precede tough periods for a business. So shareholders might well want to know whether insiders have been buying or selling shares in Macatawa Bank Corporation (NASDAQ:MCBC).
What Is Insider Buying?
It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, rules govern insider transactions, and certain disclosures are required.
Insider transactions are not the most important thing when it comes to long-term investing. 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.'
Macatawa Bank Insider Transactions Over The Last Year
In the last twelve months, the biggest single sale by an insider was when the Senior VP & Chief Retail Banking Officer, Jill Walcott, sold US$155k worth of shares at a price of US$10.37 per share. So we know that an insider sold shares at around the present share price of US$9.97. While insider selling is a negative, to us, it is more negative if the shares are sold at a lower price. In this case, the big sale took place at around the current price, so it's not too bad (but it's still not a positive).
Over the last year, we can see that insiders have bought 650 shares worth US$6.6k. But they sold 26474 for US$273k. Over the last year we saw more insider selling of Macatawa Bank shares, than buying. The chart below shows insider transactions (by individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
I will like Macatawa Bank better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
Macatawa Bank Insiders Are Selling The Stock
The last three months saw some Macatawa Bank insider selling. Director Charles Geenen divested only US$20k worth of shares in that time. Neither the lack of buying nor the presence of selling is heartening. But the amount sold isn't enough for us to put any weight on it.
Does Macatawa Bank Boast High Insider Ownership?
Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Insiders own 7.4% of Macatawa Bank shares, worth about US$25m. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.
What Might The Insider Transactions At Macatawa Bank Tell Us?
While there has not been any insider buying in the last three months, there has been selling. But the sales were small, so we're not concerned. We're a little cautious about the insider selling at Macatawa Bank. But it's good to see that insiders own shares in the company. 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.
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.
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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.