It is not uncommon to see companies perform well in the years after insiders buy shares. 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 before you buy or sell Amalgamated Bank (NASDAQ:AMAL), you may well want to know whether insiders have been buying or selling.
Do Insider Transactions Matter?
It's quite normal to see company insiders, such as board members, trading in company stock, from time to time. 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 logic dictates you should pay some attention to whether insiders are buying or selling shares. For example, a Harvard University study found that 'insider purchases earn abnormal returns of more than 6% per year'.
Amalgamated Bank Insider Transactions Over The Last Year
In the last twelve months, the biggest single purchase by an insider was when Senior Executive VP & CFO Andrew LaBenne bought US$125k worth of shares at a price of US$10.48 per share. So it's clear an insider wanted to buy, at around the current price, which is US$11.64. 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. We do always like to see insider buying, but it is worth noting if those purchases were made at well below today's share price, as the discount to value may have narrowed with the rising price. The good news for Amalgamated Bank share holders is that insiders were buying at near the current price.
Over the last year, we can see that insiders have bought 15.60k shares worth US$168k. But they sold 1.20k shares for US$21k. In total, Amalgamated Bank insiders bought more than they sold over the last year. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. By clicking on the graph below, you can see the precise details of each insider transaction!
There are always plenty of stocks that insiders are buying. So if that suits your style you could check each stock one by one or you could take a look at this free list of companies. (Hint: insiders have been buying them).
Are Amalgamated Bank Insiders Buying Or Selling?
We saw some Amalgamated Bank insider buying shares in the last three months. Independent Director Maryann Bruce bought US$9.9k worth of shares in that time. It's great to see that insiders are only buying, not selling. But in this case the amount purchased means the recent transaction may not be very meaningful on its own.
Does Amalgamated Bank Boast High Insider Ownership?
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. From looking at our data, insiders own US$1.1m worth of Amalgamated Bank stock, about 0.3% of the company. I generally like to see higher levels of ownership.
So What Do The Amalgamated Bank Insider Transactions Indicate?
Insider purchases may have been minimal, in the last three months, but there was no selling at all. Overall the buying isn't worth writing home about. But insiders have shown more of an appetite for the stock, over the last year. While we have no worries about the insider transactions, we'd be more comfortable if they owned more Amalgamated Bank stock. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Amalgamated Bank. For example - Amalgamated Bank has 1 warning sign we think you should be aware of.
But note: Amalgamated Bank 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.
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.
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