It is not uncommon to see companies perform well in the years after insiders buy shares. 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 shareholders might well want to know whether insiders have been buying or selling shares in Southside Bancshares, Inc. (NASDAQ:SBSI).
What Is Insider Buying?
It's quite normal to see company insiders, such as board members, trading in company stock, from time to time. 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. For example, a Columbia University study found that 'insiders are more likely to engage in open market purchases of their own company’s stock when the firm is about to reveal new agreements with customers and suppliers'.
Southside Bancshares Insider Transactions Over The Last Year
The Independent Director Melvin Lovelady made the biggest insider purchase in the last 12 months. That single transaction was for US$53k worth of shares at a price of US$26.47 each. So it's clear an insider wanted to buy, at around the current price, which is US$27.99. Of course they may have changed their mind. But this suggests they are optimistic. We do always like to see insider buying, but it is worth noting if those purchases were made at well below today's share price, as the discount to value may have narrowed with the rising price. The good news for Southside Bancshares share holders is that insiders were buying at near the current price.
Over the last year, we can see that insiders have bought 6.93k shares worth US$194k. On the other hand they divested 163.00 shares, for US$4.7k. Overall, Southside Bancshares insiders were net buyers during the last year. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
Southside Bancshares is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Have Southside Bancshares Insiders Traded Recently?
In the last three months, insiders sold US$4.7k. That's only a tiny bit more than the purchases, worth US$4.4k. Looking at the net result, we don't think this recent trading sheds much light on how insiders, as a group, are feeling about the company's prospects.
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. A high insider ownership often makes company leadership more mindful of shareholder interests. Southside Bancshares insiders own about US$52m worth of shares. That equates to 5.7% of the company. 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 Southside Bancshares Insiders?
We note that there's been a little more insider selling than buying, recently. But the net divestment is not enough to concern us at all. However, our analysis of transactions over the last year is heartening. Insiders own shares in Southside Bancshares and we see no evidence to suggest they are worried about the future. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. For example - Southside Bancshares has 1 warning sign we think you should be aware of.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting 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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