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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. 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 before you buy or sell TowneBank (NASDAQ:TOWN), 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 equally, we would consider it foolish to ignore insider transactions altogether. 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 TowneBank
In the last twelve months, the biggest single sale by an insider was when the , Robert Hatley, sold US$1.8m worth of shares at a price of US$32.45 per share. So what is clear is that an insider saw fit to sell at around the current price of US$27.15. While we don't usually like to see insider selling, it's more concerning if the sales take price 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).
Over the last year, we can see that insiders have bought 99658 shares worth US$2.6m. On the other hand they divested 102k shares, for US$3.1m. All up, insiders sold more shares in TowneBank 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 click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
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).
Insiders at TowneBank Have Bought Stock Recently
Over the last three months, we've seen significantly more insider buying, than insider selling, at TowneBank. In fact, seven insiders bought US$232k worth of shares. But insiders only sold shares worth US$85k. We think insiders may be optimistic about the future, since insiders have been net buyers of shares.
Insider Ownership of TowneBank
For a common shareholder, it is worth checking how many shares are held by company insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. TowneBank insiders own about US$221m worth of shares (which is 11% of the company). I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.
So What Do The TowneBank Insider Transactions Indicate?
The recent insider purchases are heartening. However, the longer term transactions are not so encouraging. The recent buying by some insiders, along with high insider ownership, suggest that TowneBank insiders are fairly aligned, and optimistic. Of course, the future is what matters most. So if you are interested in TowneBank, you should check out this free report on analyst forecasts for the company.
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.
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If you spot an error that warrants correction, please contact the editor at email@example.com. 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.