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In the last year, multiple insiders have substantially increased their holdings of Nicholas Financial, Inc. (NASDAQ:NICK) stock, indicating that insiders' optimism about the company's prospects has increased.
Although we don't think shareholders should simply follow insider transactions, we would consider it foolish to ignore insider transactions altogether.
Nicholas Financial Insider Transactions Over The Last Year
The Director Adam Peterson made the biggest insider purchase in the last 12 months. That single transaction was for US$735k worth of shares at a price of US$10.98 each. That implies that an insider found the current price of US$11.72 per share to be enticing. That means they have been optimistic about the company in the past, though they may have changed their mind. We do always like to see insider buying, but it is worth noting if those purchases were made at well below today's share price, as the discount to value may have narrowed with the rising price. Happily, the Nicholas Financial insiders decided to buy shares at close to current prices.
Nicholas Financial insiders may have bought shares in the last year, but they didn't sell any. The chart below shows insider transactions (by companies and individuals) over the last year. 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 Nicholas Financial Have Bought Stock Recently
It's good to see that Nicholas Financial insiders have made notable investments in the company's shares. In total, insiders bought US$290k 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.
Insider Ownership of Nicholas Financial
Many investors like to check how much of a company is owned by insiders. I reckon it's a good sign if insiders own a significant number of shares in the company. Our data suggests Nicholas Financial insiders own 2.3% of the company, worth about US$2.1m. However, it's possible that insiders might have an indirect interest through a more complex structure. We consider this fairly low insider ownership.
What Might The Insider Transactions At Nicholas Financial Tell Us?
It is good to see recent purchasing. And the longer term insider transactions also give us confidence. While the overall levels of insider ownership are below what we'd like to see, the history of transactions imply that Nicholas Financial insiders are reasonably well aligned, and optimistic for the future. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. When we did our research, we found 2 warning signs for Nicholas Financial (1 is concerning!) that we believe deserve your full attention.
But note: Nicholas Financial may not be the best stock to buy. So take a peek at this free list of interesting companies with high ROE and low debt.
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.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.