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 before you buy or sell 1st Constitution Bancorp (NASDAQ:FCCY), 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 in the company. However, such insiders must disclose their trading activities, and not trade on inside information.
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 1st Constitution Bancorp
Over the last year, we can see that the biggest insider purchase was by Executive VP and Chief Lending & Credit Officer John Andreacio for US$98k worth of shares, at about US$19.53 per share. That means that an insider was happy to buy shares at above the current price of US$18.03. While their view may have changed since the purchase was made, this does at least suggest they have had confidence in the company's future. We always take careful note of the price insiders pay when purchasing shares. Generally speaking, it catches our eye when insiders have purchased shares at above current prices, as it suggests they believed the shares were worth buying, even at a higher price.
While 1st Constitution Bancorp insiders bought shares during the last year, they didn't sell. The average buy price was around US$14.88. It's great to see insiders putting their own cash into the company's stock, albeit at below the recent share price. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. By clicking on the graph below, you can see the precise details of each insider transaction!
There are always plenty of stocks that insiders are buying. So if that suits your style you could check each stock one by one or you could take a look at this free list of companies. (Hint: insiders have been buying them).
Insiders at 1st Constitution Bancorp Have Bought Stock Recently
It's good to see that 1st Constitution Bancorp insiders have made notable investments in the company's shares. Independent Chairman of the Board Charles Crow spent US$63k on stock, and there wasn't any selling. That shows some optimism about the company's future.
I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with insiders. I reckon it's a good sign if insiders own a significant number of shares in the company. 1st Constitution Bancorp insiders own about US$23m worth of shares. That equates to 12% of the company. We've certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.
So What Does This Data Suggest About 1st Constitution Bancorp Insiders?
It's certainly positive to see the recent insider purchase. We also take confidence from the longer term picture of insider transactions. Insiders likely see value in 1st Constitution Bancorp shares, given these transactions (along with notable insider ownership of the company). In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing 1st Constitution Bancorp. To assist with this, we've discovered 2 warning signs that you should run your eye over to get a better picture of 1st Constitution Bancorp.
Of course 1st Constitution Bancorp 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 currently account for open market transactions and private dispositions, but not derivative transactions.
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. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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