We often see insiders buying up shares in companies that perform well over the long term. The flip side of that is that there are more than a few examples of insiders dumping stock prior to a period of weak performance. So before you buy or sell Northeast Bancorp (NASDAQ:NBN), 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 on the market. 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 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 Northeast Bancorp
In the last twelve months, the biggest single purchase by an insider was when President Richard Wayne bought US$222k worth of shares at a price of US$22.20 per share. That means that even when the share price was higher than US$21.64 (the recent price), an insider wanted to purchase shares. 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 is very important. 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.
In the last twelve months insiders purchased 20575 shares for US$436k. But they sold 3500 for US$73k. Overall, Northeast Bancorp insiders were net buyers last year. The chart below shows insider transactions (by individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!
There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of growing companies that insiders are buying.
Northeast Bancorp Insiders Are Selling The Stock
Over the last three months, we've seen a bit of insider selling at Northeast Bancorp. Julie Jenkins sold US$40k worth of shares in that time. But at least we saw US$3.4k worth of buying. While it's not great to see insider selling, the net amount sold isn't enough for us to want to read anything into it.
Does Northeast Bancorp 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. We usually like to see fairly high levels of insider ownership. Northeast Bancorp insiders own about US$17m worth of shares. That equates to 8.9% of the company. While this is a strong but not outstanding level of insider ownership, it's enough to indicate some alignment between management and smaller shareholders.
So What Does This Data Suggest About Northeast Bancorp Insiders?
Our data shows a little more insider selling than buying in the last three months. But the net divestment is not enough to concern us at all. On a brighter note, the transactions over the last year are encouraging. Insiders do have a stake in Northeast Bancorp and their transactions don't cause us concern. I like to dive deeper into how a company has performed in the past. You can find historic revenue and earnings in this detailed graph.
But note: Northeast Bancorp 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.
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