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We often see insiders buying up shares in companies that perform well over the long term. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So before you buy or sell Community Trust Bancorp, Inc. (NASDAQ:CTBI), you may well want to know whether insiders have been buying or selling.
What Is Insider Buying?
It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, most countries require that the company discloses such transactions to the market.
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'.
Community Trust Bancorp Insider Transactions Over The Last Year
In the last twelve months, the biggest single sale by an insider was when the Executive VP, Kevin Stumbo, sold US$51k worth of shares at a price of US$44.72 per share. We generally don't like to see insider selling, but the lower the sale price, the more it concerns us. It's of some comfort that this sale was conducted at a price well above the current share price, which is US$35.73. So it may not shed much light on insider confidence at current levels.
In the last twelve months insiders purchased 4.00k shares for US$116k. On the other hand they divested 1.67k shares, for US$68k. In the last twelve months there was more buying than selling by Community Trust Bancorp insiders. 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!
Community Trust Bancorp is not the only stock that insiders are buying. For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.
Community Trust Bancorp Insiders Bought Stock Recently
At Community Trust Bancorp,over the last quarter, we have observed quite a lot more insider buying than insider selling. In fact, two insiders bought US$87k worth of shares. But Executive Vice President James Gartner sold shares worth US$16k. Insiders have spent more buying shares than they have selling, so on balance we think they are are probably optimistic.
Does Community Trust Bancorp Boast High Insider Ownership?
I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with insiders. I reckon it's a good sign if insiders own a significant number of shares in the company. Insiders own 5.0% of Community Trust Bancorp shares, worth about US$32m. We've certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.
So What Does This Data Suggest About Community Trust Bancorp Insiders?
It is good to see recent purchasing. We also take confidence from the longer term picture of insider transactions. Insiders likely see value in Community Trust Bancorp shares, given these transactions (along with notable insider ownership of the company). So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. In terms of investment risks, we've identified 1 warning sign with Community Trust Bancorp and understanding this should be part of your investment process.
Of course Community Trust Bancorp may not be the best stock to buy. So you may wish to see this free collection of high quality 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.
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