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

Brandon Murphy

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 before you buy or sell Horizon Bancorp, Inc. (NASDAQ:HBNC), 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, rules govern insider transactions, and certain disclosures are required.

We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. 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’.

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Horizon Bancorp Insider Transactions Over The Last Year

Over the last year, we can see that the biggest insider sale was by Director Michele Magnuson for US$273k worth of shares, at about US$18.19 per share. So we know that an insider sold shares at around the present share price of US$16.73. They could have a variety of motivations for selling, but it’s still not particularly encouraging to see. Arguably, insider selling at around current prices should give us reason to reflect on whether the stock is fully valued at the moment.

In the last twelve months insiders purchased 6.55k shares for US$118k. But they sold 26.94k for US$505k. Over the last year we saw more insider selling of Horizon Bancorp shares, than buying. They sold for an average price of about US$18.75. 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. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

NasdaqGS:HBNC Insider Trading January 21st 19

Horizon Bancorp is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.

Horizon Bancorp Insiders Bought Stock Recently

Over the last three months, we’ve seen significant insider buying at Horizon Bancorp. Overall, 2 insiders shelled out US$67k for shares in the company — and none sold. This is a positive in our book as it implies some confidence.

Does Horizon Bancorp Boast High Insider Ownership?

I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with insiders. We usually like to see fairly high levels of insider ownership. Insiders own 4.3% of Horizon Bancorp shares, worth about US$28m. While this is a strong but not outstanding level of insider ownership, it’s enough to indicate some alignment between management and smaller shareholders.

So What Does This Data Suggest About Horizon Bancorp Insiders?

It’s certainly positive to see the recent insider purchases. But we can’t say the same for the transactions over the last 12 months. While recent transactions indicate confidence in Horizon Bancorp, insiders don’t own enough of the company to overcome our cautiousness about the longer term transactions. Overall they seem reasonably aligned. Of course, the future is what matters most. So if you are interested in Horizon Bancorp, you should check out this free report on analyst forecasts for the company.

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.

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.