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 First United Corporation (NASDAQ:FUNC), 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, rules govern insider transactions, and certain disclosures are required.
We don't think shareholders should simply follow insider transactions. But logic dictates you should pay some attention to whether insiders are buying or selling shares. As Peter Lynch said, 'insiders might sell their shares for any number of reasons, but they buy them for only one: they think the price will rise.
First United Insider Transactions Over The Last Year
Chairman Carissa Rodeheaver made the biggest insider purchase in the last 12 months. That single transaction was for US$102k worth of shares at a price of US$20.05 each. That means that an insider was happy to buy shares at around the current price of US$22.93. Of course they may have changed their mind. But this suggests they are optimistic. While we always like to see insider buying, it's less meaningful if the purchases were made at much lower prices, as the opportunity they saw may have passed. Happily, the First United insiders decided to buy shares at close to current prices.
Over the last year, we can see that insiders have bought 8171.34 shares worth US$157k. But insiders sold 500 shares worth US$9.0k. In total, First United insiders bought more than they sold over the last year. You can see the insider transactions (by individuals) over the last year depicted in the chart below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
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).
Insiders at First United Have Bought Stock Recently
It's good to see that First United insiders have made notable investments in the company's shares. Not only was there no selling that we can see, but they collectively bought US$110k worth of shares. This could be interpreted as suggesting a positive outlook.
Insider Ownership of First United
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. A high insider ownership often makes company leadership more mindful of shareholder interests. From our data, it seems that First United insiders own 4.3% of the company, worth about US$7.1m. We do generally prefer see higher levels of insider ownership.
What Might The Insider Transactions At First United Tell Us?
The recent insider purchases are heartening. And the longer term insider transactions also give us confidence. While the overall levels of insider ownership are below what we'd like to see, the history of transactions imply that First United insiders are reasonably well aligned, and optimistic for the future. I like to dive deeper into how a company has performed in the past. You can access this interactive graph of past earnings, revenue and cash flow for free.
Of course First United 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.
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 firstname.lastname@example.org. 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.