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 shareholders might well want to know whether insiders have been buying or selling shares in Texas Capital Bancshares, Inc. (NASDAQ:TCBI).
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, most countries require that the company discloses such transactions to the market.
Insider transactions are not the most important thing when it comes to long-term investing. But logic dictates you should pay some attention to whether insiders are buying or selling shares. 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 Texas Capital Bancshares
Over the last year, we can see that the biggest insider sale was by the Director, Ian Turpin, for US$495k worth of shares, at about US$93.06 per share. While insider selling is a negative, to us, it is more negative if the shares are sold at a lower price. The silver lining is that this sell-down took place above the latest price (US$55.65). So it is hard to draw any strong conclusion from it. Ian Turpin was the only individual insider to sell shares in the last twelve months.
In the last twelve months insiders purchased 8000 shares for US$513k. But they sold 9297 for US$736k. Ian Turpin ditched 9297 shares over the year. The average price per share was US$79.17. You can see the insider transactions (by individuals) over the last year depicted in the chart below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
I will like Texas Capital Bancshares better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
Texas Capital Bancshares Insiders Are Selling The Stock
We've seen more insider selling than insider buying at Texas Capital Bancshares recently. We note Ian Turpin cashed in US$241k worth of shares. On the other hand we note President C. Cargill bought US$176k worth of shares. The share price has moved a bit recently, but it's hard to argue that the selling is a positive.
Does Texas Capital Bancshares Boast High Insider Ownership?
For a common shareholder, it is worth checking how many shares are held by company insiders. We usually like to see fairly high levels of insider ownership. Insiders own 0.7% of Texas Capital Bancshares shares, worth about US$19m. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.
So What Do The Texas Capital Bancshares Insider Transactions Indicate?
The insider sales have outweighed the insider buying, at Texas Capital Bancshares, in the last three months. Zooming out, the longer term picture doesn't give us much comfort. On the plus side, Texas Capital Bancshares makes money, and is growing profits. Insiders own shares, but we're still pretty cautious, given the history of sales. We'd think twice before buying! Of course, the future is what matters most. So if you are interested in Texas Capital Bancshares, you should check out this free report on analyst forecasts for the company.
Of course Texas Capital Bancshares 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.
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 firstname.lastname@example.org. 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.