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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 we'll take a look at whether insiders have been buying or selling shares in West Bancorporation, Inc. (NASDAQ:WTBA).
Do Insider Transactions Matter?
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, 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 logic dictates you should pay some attention to whether insiders are buying or selling shares. For example, a Harvard University study found that 'insider purchases earn abnormal returns of more than 6% per year.'
The Last 12 Months Of Insider Transactions At West Bancorporation
Over the last year, we can see that the biggest insider purchase was by Director Sean McMurray for US$173k worth of shares, at about US$20.66 per share. So it's clear an insider wanted to buy, at around the current price, which is US$21.35. That means they have been optimistic about the company in the past, though they may have changed their mind. 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. In this case we're pleased to report that the insider purchases were made at close to current prices.
Happily, we note that in the last year insiders bought 17097 shares for a total of US$360k. While West Bancorporation insiders bought shares last year, they didn't sell. 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!
West Bancorporation is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Insiders at West Bancorporation Have Bought Stock Recently
Over the last three months, we've seen significant insider buying at West Bancorporation. Not only was there no selling that we can see, but they collectively bought US$306k worth of shares. This could be interpreted as suggesting a positive outlook.
Many investors like to check how much of a company is owned by insiders. We usually like to see fairly high levels of insider ownership. Insiders own 3.3% of West Bancorporation shares, worth about US$11m. 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 Do The West Bancorporation Insider Transactions Indicate?
It is good to see recent purchasing. And the longer term insider transactions also give us confidence. Insiders likely see value in West Bancorporation shares, given these transactions (along with notable insider ownership of the company). Of course, the future is what matters most. So if you are interested in West Bancorporation, you should check out this free report on analyst forecasts for the company.
Of course West Bancorporation 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 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.