We often see insiders buying up shares in companies that perform well over the long term. 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 shareholders might well want to know whether insiders have been buying or selling shares in First Capital, Inc. (NASDAQ:FCAP).
Do Insider Transactions Matter?
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 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 First Capital
Over the last year, we can see that the biggest insider sale was by the Independent Director, Samuel Uhl, for US$295k worth of shares, at about US$51.17 per share. So it's clear an insider wanted to take some cash off the table, even slightly below the current price of US$51.29. When an insider sells below the current price, it suggests that they considered that lower price to be fair. That makes us wonder what they think of the (higher) recent valuation. Please do note, however, that sellers may have a variety of reasons for selling, so we don't know for sure what they think of the stock price. We note that the biggest single sale was only 21.8% of Samuel Uhl's holding.
Over the last year, we can see that insiders have bought 2360 shares worth US$94k. But they sold 6671 for US$335k. In total, First Capital insiders sold more 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!
If you like to buy stocks that insiders are buying, rather than selling, then you might just love this free list of companies. (Hint: insiders have been buying them).
First Capital Insiders Are Selling The Stock
We've seen more insider selling than insider buying at First Capital recently. We note insiders cashed in US$331k worth of shares. Meanwhile Dennis Huber bought US$11k worth. Since the selling really does outweigh the buying, we'd say that these transactions may suggest that some insiders feel the shares are not cheap.
Many investors like to check how much of a company is owned by 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. Insiders own 4.7% of First Capital shares, worth about US$8.2m, according to our data. Whilst better than nothing, we're not overly impressed by these holdings.
What Might The Insider Transactions At First Capital Tell Us?
The stark truth for First Capital is that there has been more insider selling than insider buying in the last three months. Despite some insider buying, the longer term picture doesn't make us feel much more positive. But since First Capital is profitable and growing, we're not too worried by this. Insiders own relatively few shares in the company, and when you consider the sales, we're not particularly excited about the stock. As the saying goes, only fools rush in. I like to dive deeper into how a company has performed in the past. You can access this interactive graph of past earnings, revenue and cash flow for free .
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.
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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.