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 we'll take a look at whether insiders have been buying or selling shares in Prosperity Bancshares, Inc. (NYSE:PB).
What Is Insider Buying?
It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, such insiders must disclose their trading activities, and not trade on inside information.
We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. But it is perfectly logical to keep tabs on what insiders are doing. For example, a Harvard University study found that 'insider purchases earn abnormal returns of more than 6% per year.
Prosperity Bancshares Insider Transactions Over The Last Year
Vice Chairman H. Timanus made the biggest insider purchase in the last 12 months. That single transaction was for US$644k worth of shares at a price of US$64.75 each. That means that an insider was happy to buy shares at around the current price of US$73.28. 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 Prosperity Bancshares insider decided to buy shares at close to current prices. The only individual insider to buy over the last year was H. Timanus.
H. Timanus bought 20000 shares over the last 12 months at an average price of US$61.39. The chart below shows insider transactions (by individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
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).
Prosperity Bancshares Insiders Bought Stock Recently
There has been significantly more insider buying, than selling, at Prosperity Bancshares, over the last three months. Vice Chairman H. Timanus spent US$644k on stock. On the other hand, Executive Vice President Robert Dowdell netted US$497k by selling. We think insiders may be optimistic about the future, since insiders have been net buyers of shares.
Does Prosperity Bancshares 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. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Prosperity Bancshares insiders own about US$248m worth of shares (which is 4.9% of the company). This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.
So What Do The Prosperity Bancshares Insider Transactions Indicate?
It is good to see the recent insider purchase. And an analysis of the transactions over the last year also gives us confidence. Once you factor in the high insider ownership, it certainly seems like insiders are positive about Prosperity Bancshares. One for the watchlist, at least! Therefore, you should should definitely take a look at this FREE report showing analyst forecasts for Prosperity Bancshares.
If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, that have HIGH return on equity 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.
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.