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 shareholders might well want to know whether insiders have been buying or selling shares in Parke Bancorp, Inc. (NASDAQ:PKBK).
What Is Insider Selling?
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 Parke Bancorp
In the last twelve months, the biggest single sale by an insider was when the Director, Edward Infantolino, sold US$114k worth of shares at a price of US$22.70 per share. That means that even when the share price was slightly below the current price of US$22.77, an insider wanted to cash in some shares. 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. While insider selling is not a positive sign, we can't be sure if it does mean insiders think the shares are fully valued, so it's only a weak sign. This single sale was just 3.4% of Edward Infantolino's stake.
In the last twelve months insiders purchased 8550 shares for US$161k. But insiders sold 20000 shares worth US$425k. In total, Parke Bancorp 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. By clicking on the graph below, you can see the precise details of each insider transaction!
If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.
Parke Bancorp Insiders Are Selling The Stock
There was substantially more insider selling, than buying, of Parke Bancorp shares over the last three months. In that time, Director Jeffrey Kripitz dumped US$86k worth of shares. On the flip side, President Vito Pantilione spent US$17k on purchasing shares. 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.
Insider Ownership of Parke Bancorp
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. I reckon it's a good sign if insiders own a significant number of shares in the company. Parke Bancorp insiders own about US$42m worth of shares. That equates to 17% of the company. 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 Parke Bancorp Insider Transactions Indicate?
Unfortunately, there has been more insider selling of Parke Bancorp stock, than buying, in the last three months. Zooming out, the longer term picture doesn't give us much comfort. But it is good to see that Parke Bancorp is growing earnings. Insiders own shares, but we're still pretty cautious, given the history of sales. We're in no rush to buy! To put this in context, take a look at how a company has performed in the past. You can access this detailed graph of past earnings, revenue and cash flow .
But note: Parke Bancorp 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. 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.