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We've lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. 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 Central Pacific Financial Corp. (NYSE:CPF), 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.
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 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'.
The Last 12 Months Of Insider Transactions At Central Pacific Financial
In the last twelve months, the biggest single sale by an insider was when the Chairman Emeritus, John Dean, sold US$1.1m worth of shares at a price of US$30.78 per share. So we know that an insider sold shares at around the present share price of US$30.03. While insider selling is a negative, to us, it is more negative if the shares are sold at a lower price. In this case, the big sale took place at around the current price, so it's not too bad (but it's still not a positive).
In the last twelve months insiders purchased 14600 shares for US$415k. On the other hand they divested 68080.26 shares, for US$2.0m. All up, insiders sold more shares in Central Pacific Financial than they bought, over the last year. You can see a visual depiction of insider transactions (by individuals) over the last 12 months, below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.
Insiders at Central Pacific Financial Have Sold Stock Recently
Over the last three months, we've seen notably more insider selling, than insider buying, at Central Pacific Financial. In that time, John Dean dumped US$1.4m worth of shares. On the other hand we note insiders bought US$415k worth of shares, as previously mentioned. Generally this level of net selling might be considered a bit bearish.
Many investors like to check how much of a company is owned by insiders. I reckon it's a good sign if insiders own a significant number of shares in the company. Insiders own 2.4% of Central Pacific Financial shares, worth about US$20m. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.
So What Do The Central Pacific Financial Insider Transactions Indicate?
Unfortunately, there has been more insider selling of Central Pacific Financial stock, than buying, in the last three months. Zooming out, the longer term picture doesn't give us much comfort. On the plus side, Central Pacific Financial makes money, and is growing profits. While insiders do own shares, they don't own a heap, and they have been selling. So we'd only buy after careful consideration. Therefore, you should should definitely take a look at this FREE report showing analyst forecasts for Central Pacific Financial.
But note: Central Pacific Financial 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.
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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.