We often see insiders buying up shares in companies that perform well over the long term. 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 Parke Bancorp, Inc. (NASDAQ:PKBK), 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, most countries require that the company discloses such transactions to the market.
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 Harvard University study found that ‘insider purchases earn abnormal returns of more than 6% per year.’
Parke Bancorp Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider sale was by Director Jack Sheppard for US$152k worth of shares, at about US$18.83 per share. That means that an insider was selling shares at around the current price of US$17.77. They could have a variety of motivations for selling, but it’s still not particularly encouraging to see. We usually pause to reflect on the potential that a stock has a high valuation, if insiders have been selling at around the current price. Notably Jack Sheppard was also the biggest buyer, having purchased US$174k worth of shares.
Over the last year, we can see that insiders have bought 9.24k shares worth US$174k. But insiders sold 32.06k shares worth US$652k. In total, Parke Bancorp insiders sold more than they bought over the last year. They sold for an average price of about US$20.35. It’s not particularly great to see insiders were selling shares around current prices. While some insiders have decided to take some money off the table, we wouldn’t put too much weight on this fact. You can see a visual depiction of insider transactions 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!
There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of growing companies that insiders are buying.
Insiders at Parke Bancorp Have Bought Stock Recently
Over the last three months, we’ve seen significant insider buying at Parke Bancorp. In total, insiders bought US$125k worth of shares in that time, and we didn’t record any sales whatsoever. This is a positive in our book as it implies some confidence.
Does Parke Bancorp Boast High Insider Ownership?
For a common shareholder, it is worth checking how many shares are held by company 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. Parke Bancorp insiders own about US$36m worth of shares (which is 20% 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 Parke Bancorp Insider Transactions Indicate?
It’s certainly positive to see the recent insider purchases. But we can’t say the same for the transactions over the last 12 months. The more recent transactions are a positive, but Parke Bancorp insiders haven’t shown the sustained enthusiasm that we look for, although they do own a decent number of shares, overall. So they seem pretty well aligned, overall. 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 .
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 email@example.com.