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We often see insiders buying up shares in companies that perform well over the long term. 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 Commerce Bancshares, Inc. (NASDAQ:CBSH).
Do Insider Transactions Matter?
It's quite normal to see company insiders, such as board members, trading in company stock, from time to time. However, most countries require that the company discloses such transactions to the market.
We don't think shareholders should simply follow insider transactions. But logic dictates you should pay some attention to whether insiders are buying or selling shares. As Peter Lynch said, 'insiders might sell their shares for any number of reasons, but they buy them for only one: they think the price will rise.'
Commerce Bancshares Insider Transactions Over The Last Year
In the last twelve months, the biggest single sale by an insider was when Director Jonathan Kemper sold US$3.2m worth of shares at a price of US$67.95 per share. So what is clear is that an insider saw fit to sell at around the current price of US$57.50. They might be selling for a variety of reasons, but it's hard to argue this is a bullish sign. 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 550.84 shares for US$32k. On the other hand they divested 238.19k shares, for US$15m. In total, Commerce Bancshares insiders sold more than they bought over the last year. The sellers received a price of around US$62.73, on average. We don't gain much confidence from insider selling near the recent share price. 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 the insider transactions (by individuals) over the last year depicted in the chart below. By clicking on the graph below, you can see the precise details of each insider transaction!
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Commerce Bancshares Insiders Are Selling The Stock
The last quarter saw substantial insider selling of Commerce Bancshares shares. In total, insiders dumped US$5.9m 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.
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. We usually like to see fairly high levels of insider ownership. Commerce Bancshares insiders own about US$222m worth of shares (which is 3.5% of the company). Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.
So What Do The Commerce Bancshares Insider Transactions Indicate?
Insiders sold stock recently, but they haven't been buying. Despite some insider buying, the longer term picture doesn't make us feel much more positive. But it is good to see that Commerce Bancshares is growing earnings. While insiders do own a lot of shares in the company (which is good), our analysis of their transactions doesn't make us feel confident about the company. If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its future.
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.
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 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.