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 MainStreet Bancshares, Inc. (NASDAQ:MNSB), you may well want to know whether insiders have been buying or selling.
What Is Insider Selling?
Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock in the 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 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'.
The Last 12 Months Of Insider Transactions At MainStreet Bancshares
Over the last year, we can see that the biggest insider purchase was by Independent Director Terry Saeger for US$136k worth of shares, at about US$22.72 per share. So it's clear an insider wanted to buy, even at a higher price than the current share price (being US$13.06). It's very possible they regret the purchase, but it's more likely they are bullish about the company. To us, it's very important to consider the price insiders pay for shares. As a general rule, we feel more positive about a stock if insiders have bought shares at above current prices, because that suggests they viewed the stock as good value, even at a higher price. Notably Terry Saeger was also the biggest seller.
In the last twelve months insiders purchased 13.59k shares for US$250k. But insiders sold 6.00k shares worth US$135k. Overall, MainStreet Bancshares insiders were net buyers during the last year. The average buy price was around US$18.39. This is nice to see since it implies that insiders might see value around current prices. 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).
MainStreet Bancshares Insiders Bought Stock Recently
Over the last three months, we've seen a bit of insider buying at MainStreet Bancshares. Insiders shelled out US$45k for shares in that time. It's good to see the insider buying, as well as the lack of recent sellers. But in this case the amount purchased means the recent transaction may not be very meaningful on its own.
Insider Ownership of MainStreet Bancshares
Many investors like to check how much of a company is owned by 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. Our data indicates that MainStreet Bancshares insiders own about US$6.5m worth of shares (which is 6.2% of the company). Whilst better than nothing, we're not overly impressed by these holdings.
So What Does This Data Suggest About MainStreet Bancshares Insiders?
We note a that there has been a bit of insider buying recently (but no selling). Overall the buying isn't worth writing home about. On a brighter note, the transactions over the last year are encouraging. The transactions are fine but it'd be more encouraging if MainStreet Bancshares insiders bought more 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.
But note: MainStreet Bancshares 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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