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 DNB Financial Corporation (NASDAQ:DNBF), you may well want to know whether insiders have been buying or selling.
What Is Insider Buying?
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, such insiders must disclose their trading activities, and not trade on inside information.
Insider transactions are not the most important thing when it comes to long-term investing. But equally, we would consider it foolish to ignore insider transactions altogether. For example, a Colombia 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’.
DNB Financial Insider Transactions Over The Last Year
In the last twelve months, the biggest single sale by an insider was when Executive VP & Chief Accounting Officer Bruce Moroney sold US$169k worth of shares at a price of US$35.93 per share. That means that an insider was selling shares at around the current price of US$26.96. While their view may have changed since the sale, this is not a particularly positive fact. We generally tread carefully if insiders have been selling on market, even if they sold slightly above the current price.
In the last twelve months insiders purchased 5.02k shares for US$176k. On the other hand they divested 15.18k shares, for US$520k. Over the last year we saw more insider selling of DNB Financial shares, than buying. They sold for an average price of about US$34.24. It’s not particularly great to see insiders were selling shares around current prices. Since insiders sell for many reasons, we wouldn’t put too much weight on it. You can see a visual depiction of insider transactions over the last 12 months, below. By clicking on the graph below, you can see the precise details of each insider transaction!
I will like DNB Financial better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
DNB Financial Insiders Are Selling The Stock
The last quarter saw substantial insider selling of DNB Financial shares. Specifically, insiders ditched US$51k worth of shares in that time, and we didn’t record any purchases whatsoever. This may suggest that some insiders think that the shares are not cheap.
Insider Ownership of DNB Financial
For a common shareholder, it is worth checking how many shares are held by company insiders. I reckon it’s a good sign if insiders own a significant number of shares in the company. It’s great to see that DNB Financial insiders own 13% of the company, worth about US$16m. I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.
What Might The Insider Transactions At DNB Financial Tell Us?
Insiders haven’t bought DNB Financial stock in the last three months, but there was some selling. And our longer term analysis of insider transactions didn’t bring confidence, either. Insider ownership isn’t particularly high, so this analysis makes us cautious about the company. So we’d only buy after careful consideration. Of course, the future is what matters most. So if you are interested in DNB Financial, you should check out this free report on analyst forecasts for the company.
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.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at firstname.lastname@example.org.