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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 Summit Financial Group, Inc. (NASDAQ:SMMF), 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, 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 it is perfectly logical to keep tabs on what insiders are doing. 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.'
The Last 12 Months Of Insider Transactions At Summit Financial Group
Director Duke McDaniel made the biggest insider sale in the last 12 months. That single transaction was for US$76k worth of shares at a price of US$25.39 each. That means that an insider was selling shares at below the current price (US$25.69). While sellers have a variety of reasons for selling, this isn't particularly great to see. When an insider sells below the current price, it does tend to make us wonder about the current valuation. It is worth noting that this sale was only 12.4% of Duke McDaniel's holding.
Happily, we note that in the last year insiders paid US$87k for 3.60k shares. But they sold 7.36k for US$180k. Over the last year we saw more insider selling of Summit Financial Group shares, than buying. The sellers received a price of around US$24.48, on average. It's not too encouraging to see that insiders have sold at below the current price. Of course, the sales could be motivated for a multitude of reasons, so we shouldn't jump to conclusions. 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!
I will like Summit Financial Group better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
Summit Financial Group Insiders Are Selling The Stock
We've seen more insider selling than insider buying at Summit Financial Group recently. In total, insiders sold US$104k worth of shares in that time. On the flip side, Director Gary Hinkle spent US$18k on purchasing shares. Generally this level of net selling might be considered a bit bearish.
Insider Ownership of Summit Financial Group
Many investors like to check how much of a company is owned by 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. It appears that Summit Financial Group insiders own 11% of the company, worth about US$36m. We've certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.
What Might The Insider Transactions At Summit Financial Group Tell Us?
The insider sales have outweighed the insider buying, at Summit Financial Group, in the last three months. Despite some insider buying, the longer term picture doesn't make us feel much more positive. But since Summit Financial Group is profitable and growing, we're not too worried by this. Insider ownership isn't particularly high, so this analysis makes us cautious about the company. So we'd only buy after careful consideration. Therefore, you should should definitely take a look at this FREE report showing analyst forecasts for Summit Financial Group.
Of course Summit Financial Group may not be the best stock to buy. So you may wish to see this free collection of high quality companies.
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.