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Should You Be Worried About Insider Transactions At ESSA Bancorp, Inc. (NASDAQ:ESSA)?

Veer Mallick

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We’ve lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. 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 before you buy or sell ESSA Bancorp, Inc. (NASDAQ:ESSA), you may well want to know whether insiders have been buying or selling.

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, such insiders must disclose their trading activities, and not trade on inside information.

We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. But equally, we would consider it foolish to ignore insider transactions altogether. 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’.

View our latest analysis for ESSA Bancorp

The Last 12 Months Of Insider Transactions At ESSA Bancorp

In the last twelve months, the biggest single sale by an insider was when Executive VP & CFO Allan Muto sold US$302k worth of shares at a price of US$14.91 per share. That means that an insider was selling shares at slightly below the current price (US$15.31). While sellers have a variety of reasons for selling, this isn’t particularly great to see. As a general rule we consider it to be discouraging when insiders are selling below the current price. Please note, however, that this single sale was just 15.8% of Allan Muto’s stake.

In total, ESSA Bancorp insiders sold more than they bought over the last year. They sold for an average price of about US$15.25. 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 (by individuals) over the last 12 months, below. By clicking on the graph below, you can see the precise details of each insider transaction!

NASDAQGS:ESSA Insider Trading February 5th 19

I will like ESSA Bancorp better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.

ESSA Bancorp Insiders Are Selling The Stock

We have seen a bit of insider selling at ESSA Bancorp, over the last three months. The selling netted US$39k for insiders. But Executive VP & Chief Banking Officer Peter Gray spent US$25k on buying, too. While it’s not great to see insider selling, the net amount sold isn’t enough for us to want to read anything into it.

Insider Ownership of ESSA Bancorp

Many investors like to check how much of a company is owned by insiders. We usually like to see fairly high levels of insider ownership. ESSA Bancorp insiders own about US$14m worth of shares. That equates to 8.4% of the company. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.

What Might The Insider Transactions At ESSA Bancorp Tell Us?

Insider selling has just outweighed insider buying in the last three months. But the difference isn’t enough to have us worried. Recent sales exacerbate our caution arising from analysis of ESSA Bancorp insider transactions. But it’s good to see that insiders own shares in the company. Of course, the future is what matters most. So if you are interested in ESSA Bancorp, you should check out this free report on analyst forecasts for the company.

Of course ESSA Bancorp may not be the best stock to buy. So you may wish to see this free collection of high quality companies.

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 editorial-team@simplywallst.com.